Final Answer:
The legislation passed in 2002 that created more detailed reporting requirements for boards and executives in public US companies and accounting firms is the Sarbanes-Oxley Act.
Step-by-step explanation:
The Sarbanes-Oxley Act (SOX), enacted in 2002, was a response to corporate scandals such as Enron and WorldCom, aiming to enhance transparency and accountability in the financial reporting of public companies. One of the key provisions of SOX is Section 404, which mandates that companies and their auditors assess and report on the effectiveness of internal controls over financial reporting. This section significantly increased the reporting requirements for boards and executives, as they are now responsible for establishing and maintaining adequate internal control structures.
SOX introduced a stringent regulatory framework to restore investor confidence in the wake of high-profile corporate frauds. The Act not only imposed more detailed reporting obligations but also enhanced the independence of audit committees and increased the penalties for corporate fraud. The heightened reporting standards under SOX were designed to provide investors with more accurate and reliable information about a company's financial health, ultimately contributing to the stability and integrity of the financial markets.
In summary, the Sarbanes-Oxley Act of 2002 had a profound impact on corporate governance by imposing more rigorous reporting requirements on boards and executives of public US companies and accounting firms. Its implementation marked a significant shift towards transparency and accountability in financial reporting, with the overarching goal of fostering trust in the financial markets.