SOX
The Sarbanes-Oxley Act (SOX) is a U.S. law that ensures companies follow strict rules to maintain transparency and accountability in their financial reporting. It was introduced in 2002 to prevent corporate fraud and protect investors after major scandals like Enron and WorldCom. SOX requires companies to maintain accurate financial records, put internal controls in place, and have their financial statements audited by an independent party. This makes sure that what companies report to the public is accurate and trustworthy.
SOX not only helps build trust with investors but also strengthens the overall stability of the financial market. It holds companies and their executives accountable by setting strict penalties for any false reporting or misconduct. Although it can be expensive for companies to comply with SOX requirements, the benefits of increased investor confidence and reduced risk of financial mismanagement make it worthwhile.
By CA L.Muralidharan and CPA L.Mukundan
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