Final answer:
The Sarbanes-Oxley Act was enacted to improve financial reporting standards and restore investor confidence after a series of high-profile accounting scandals, such as those involving Enron and WorldCom. It aimed to protect investors and increase transparency in public corporate financial statements to prevent future fraud.
Step-by-step explanation:
The Sarbanes-Oxley Act (SOX) was enacted in response to a series of major accounting scandals that shook the corporate world. Notable companies like Enron, Tyco International, and WorldCom were involved in high-profile cases of accounting fraud that led to substantial financial losses for investors and a loss of confidence in financial reporting. The primary goal of the SOX legislation was A. To improve the financial reporting and restore investor confidence by implementing stringent regulations to curb accounting fraud and ensure greater transparency in the financial statements of public companies. This landmark act mandated a comprehensive framework for corporate governance, internal controls, and audit procedures, foreseeing a better-regulated financial environment.
By enforcing SOX, the government hoped to reinstate trust in the financial markets and protect investors from the kind of deceptive practices that had caused significant turmoil in the economy. The act was not enacted due to the complexity of accounting rules or to bring GAAP into alignment with global standards, nor was it a response to a lack of corporate fraud. Instead, it was a direct consequence of the high-profile financial deception that had taken place, underscoring the need for tighter monitoring and accountability within the corporate finance sphere.