Question

How much data should companies be required to keep?

After a string of corporate scandals, lawmakers enacted the Sarbanes-Oxley (SOX) Act in 2002. SOX provides a myriad of financial reporting requirements and guidelines for publicly traded companies. A main focus of SOX is the retention of business records. Because of SOX, companies have been confronted with massive new data storage requirements. For example, a company must retain all its email mes-sages just as it would other business records. Deleting stored email messages can result in a destruction of evidence infraction. Supporters of SOX state that it is essential to avoid corporate scandals caused by lack of accuracy in financial reporting. They also say that consumer confidence has increased because the financial statements are more transparent. Opponents claim that the law is overreaching and costs too much for the added benefits. Is the Sarbanes-Oxley Act an unfair burden on companies? Why or why not? Are such laws necessary in order to protect the public? Why or why not?

Answer 1

The Sarbanes-Oxley Act imposes data retention requirements on public companies to prevent the destruction of evidence. Supporters believe it is necessary to avoid corporate scandals and improve transparency, while opponents argue it burdens companies.

Step-by-step explanation:

The Sarbanes-Oxley (SOX) Act, enacted in 2002 after accounting scandals involving major corporations, imposes requirements for data retention on publicly traded companies. SOX mandates that companies retain all business records, including email messages, to prevent the destruction of evidence. Supporters argue that SOX is necessary to avoid corporate scandals and increase transparency, while opponents claim it places an unfair burden on companies. These laws are considered necessary to protect the public by increasing confidence in financial reporting and safeguarding investors from accounting fraud.