Question

Why did the Sarbanes Oxley Act get passed so quickly?

A) In response to a financial crisis
B) To address corporate accounting scandals
C) As part of a tax reform
D) To regulate international trade

Answer 1

The Sarbanes-Oxley Act was swiftly passed to address corporate accounting scandals that shook investor confidence in public company financial reporting, aiming to prevent fraud and restore trust. The correct option is B.

Step-by-step explanation:

The Sarbanes-Oxley Act was passed quickly primarily B) To address corporate accounting scandals. This legislation came into effect in 2002 in the wake of devastating financial misconduct by large corporations.

Notable examples include the scandals of Enron, Tyco International, and WorldCom.

The intention behind the Sarbanes-Oxley Act was to restore public trust and confidence in the financial reporting of public companies, with a strong emphasis on implementing measures to protect investors from the possibility of accounting fraud.