Question

After the scandals at WorldCom, Tyco, Adelphia, and Enron, in which company employees lost millions of dollars and their nest eggs, U.S. companies showed less concern for corporate governance and more interest in the development of corporate social responsibility. True/False

Answer 1

False

Step-by-step explanation:

The Enron scandal in early 2001 forever changed the face of business. In July 2002 the U.S. Congress enacted the Public Company Accounting Reform and Investor Protection Act, also known as Sarbanes Oxley (SO).

SO required corporate leaders to personally certify the accuracy of their company’s financials. It also established a variety of requirements which govern auditing and accounting firms. Some of the requirements include auditor reporting duties and restrictions which prohibits auditing firms from providing non-audit related services to companies which they audit.