Question

Passage of the Sarbanes Oxley Act lead to the establishment of what?

Answer 1

The Sarbanes-Oxley Act led to the establishment of stricter financial regulations for public companies and auditing firms, enhancing transparency and investor protection in response to several high-profile accounting scandals.

Step-by-step explanation:

The passage of the Sarbanes-Oxley Act in 2002 led to the establishment of new standards for all U.S. public company boards, management, and public accounting firms. The purpose of this Act was to increase transparency in financial reporting and require stricter accounting controls, as a response to the accounting scandals of corporations such as Enron, Tyco International, and WorldCom. The Act aimed to enhance corporate responsibility, enhance financial disclosures, and combat corporate and accounting fraud, thus protecting investors from the falsification of financial information.

One significant outcome of the Sarbanes-Oxley Act was the creation of the Public Company Accounting Oversight Board (PCAOB), which now oversees the audits of public companies in an effort to protect the interests of investors and further promote public confidence in the audit process and financial statements of public companies.

The Act also enforced stricter penalties for fraudulent financial activity and increased the accountability of auditing firms to remain independent and vigilant in their review of corporate financial records. It was a landmark piece of legislation that reformed corporate financial practices in the United States.

Answer 2

The Sarbanes-Oxley Act led to the creation of the Public Company Accounting Oversight Board (PCAOB) and established rigorous standards to strengthen corporate governance and financial reporting transparency to protect investors.

Step-by-step explanation:

The passage of the Sarbanes-Oxley Act led to the establishment of several key provisions designed to strengthen corporate governance and financial transparency. Specifically, it established new standards for all U.S. public company boards, management, and public accounting firms.

One of the most crucial components of the act was the creation of the Public Company Accounting Oversight Board (PCAOB), which oversees the audits of public companies to protect the interests of investors and further the public interest in the preparation of informative, fair, and independent audit reports.

Moreover, Sarbanes-Oxley mandated that senior executives take individual responsibility for the accuracy and completeness of corporate financial reports. It also significantly increased the penalties for fraudulent financial activity.

Ultimately, its passage was a landmark event aimed at restoring public confidence in the nation's capital markets by increasing transparency and deterring corporate and accounting fraud in the wake of high-profile scandals.