The Sarbanes-Oxley Act of 2002

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The Sarbanes-Oxley Act of 2002 requires CEO and CFOs of all large companies to personally certify their firms' financial statements, making them accountable for the accuracy of financial reporting. This provision was introduced in response to the accounting scandals of the early 2000s, which highlighted the need for greater corporate accountability and transparency. The Act also established the Public Company Accounting Oversight Board, which oversees auditors of public companies, and introduced criminal penalties for fraudulent financial reporting. While the Act did not define ethical behavior, it has been credited with promoting greater ethics and integrity in corporate governance. The Act does not require the CFO to be a member of the firm's audit committee of the board of directors, although it does require the audit committee to be independent.