In 2002, the US passed the Sarbanes ¡V Oxley Law. This law was enacted to strengthen Corporate governance and to restore lost faith by the investors, and to protect investors by improving the accuracy and reliability of corporate disclosures. U.S. Senator, Paul Sarbanes and Michael Oxley were the sponsors of said law. It was signed into law on July 30, 2002 by George W. Bush after both houses of Congress voted on it without changes 423 to 3 in the House and in the Senate 99 to 0 for an overwhelming approval (Six Sigma).
The law came to be due to accounting scandals that occurred in a number of prominent companies in the United States. Those companies were Enron, Tyco International and World Com (MCI). World Com revealed that it had overstated it earnings by more than 3.8 billion for the past five quarters in June 25, 2002. They were able to do this by improperly accounting for its operating costs (Sarbanes ¡V Oxley Act). Due to these scandals the public trust was damaged and questions were raised as to practices in the accounting a reporting of these companies (Sarbanes ¡V Oxley Act).
The Sarbanes ¡V Oxley Law involves a wide area of involvement and covers new and or enhanced standards applicable to all U.S. public companies boards, Management and public accounting firms (Six Sigma).
The SOX Law requires the SEC (Securities Exchange Commission) to implement new rulings in order to comply with the new law. This law is covered in 11 titles, and covers Corporate Board responsibilities as well as the criminal penalties if there is failure to comply (Six Sigma).
Sarbanes-Oxley Act of 2002 (Sarbanes-Oxley)
Title I
?« Public Company Accounting Oversight Board
Title II
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