Accounting Dictionary

Sarbanes-Oxley Act

Passed in 2002 the Sarbanes-Oxley Act seeks to reduce fraud and poor accounting practices.

Also called SOX, the act increased funding to the SEC, established an oversight board, required companies to rotate audit partners, reduced the amount of consulting services auditors can provide their clients, required CEOs and CFOs to sign the financial statements, required audit committees to have independent members, required codes of ethics for senior financial officers, and other similar provisions.

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