The Sarbanes-Oxley Act of 2002 (Public Company Accounting Reform and Investor Protection Act, Pub.L. 107-204, July 30, 2002, 116 Stat. 745, July 30, 2002) was enacted by Congress in the wake of corporate and accounting scandals that led to bankruptcies, severe stock losses, and a loss of confidence in the Stock Market. The act imposes new responsibilities on corporate management and criminal sanctions on those managers who flout the law. It makes Securities fraud a serious federal crime and also increases the penalties for white-collar crimes. In addition, it creates a new oversight board for the accounting profession.
Section 301 of the Sarbanes-Oxley Act (SOX) “(2) responsibilities relating to registered public accounting firms- The audit committee of each issuer, in its capacity as a committee of the Board of directors, shall be directly responsible for the appointment, compensation, and oversight of the work of any registered public accounting firm employed by that issuer (including resolution of disagreements between management and the auditor regarding financial reporting) for the purpose of preparing or issuing an audit report or related work, and each such registered public accounting firm shall report directly to the audit committee. (Sarbanes-Oxley Reporter (WG&L), 2013)
Section 302 Corporate responsibility for financial reports CEOs and CFOs must certify, in periodic reports containing financial statements filed with the Commission pursuant to section 13(a) or 15(d) of the Exchange Act , the appropriateness of financial statements and disclosures contained therein, and that those financials and disclosures fairly present the company's operations and financial condition. The signing officer has reviewed the report;based on the officer's knowledge, the report does not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements made, in light of the circumstances under which such...
References: Sarbanes Oxley simplified. (n.d.). Retrieved November 10, 2013, from Sarbanesoxleysimplified: http://www.sarbanesoxleysimplified.com/sarbox/compact/htmlact/sec404.html
Sarbanes-Oxley Reporter (WG&L). (2013). SARBANES-OXLEY ACT OF 2002 §302 [15 USC §7241] Corporate responsibility for financial reports. Retrieved November 10, 2013, from RIA Checkpoint: http://0-checkpoint.riag.com.olinkserver.franklin.edu/app/main/externalDoc?usid=e3f32w11e3cb&DocID=iNTCODE%3A5962.1&docTid=T0NTCODE%3A5962.1dr14&feature=ttoc&lastCpReqId=7093184
Sarbanes-Oxley Reporter (WG&L). (2013). Sec. 301. Public company audit committees. Retrieved November 10, 2013, from RIA Checkpoint: http://0-checkpoint.riag.com.olinkserver.franklin.edu/app/main/externalDoc?usid=e3f32w11e3cb&DocID=if28abb269e1311deb4160a48868caa77&docTid=T0LEG107%3A4188.553-1&feature=ttoc&lastCpReqId=7092324
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