Question

Which of the following is true regarding the Sarbanes Oxley act of 2002?

a. Companies with revenues exceeding $10 million must have a whistle-blower system in place.
b. Public companies must have a whistle-blower system in place.
c. Public companies with revenues exceeding $10 million must have a whistle-blower system in place.
d. All companies must have a whistle-blower system in place.

Answer 1

The correct statement regarding the Sarbanes-Oxley Act of 2002 is that public companies must have a whistle-blower system in place to encourage the reporting of fraudulent activities and enhance corporate transparency.

Step-by-step explanation:

The Sarbanes-Oxley Act of 2002 was enacted in response to a series of major accounting scandals involving corporations such as Enron, Tyco International, and WorldCom. These scandals shook investor confidence and highlighted the need for stricter regulation on corporate financial practices to protect investors from accounting fraud. A key provision of the Sarbanes-Oxley Act is the requirement for certain companies to have a whistle-blower system in place.

Regarding the options provided in the question, the correct statement is b. Public companies must have a whistle-blower system in place. This requirement is meant to encourage the reporting of fraudulent activity within a company without fear of retaliation, thereby increasing transparency and accountability in corporate governance.