Frequently Asked Questions

What new corporate governance guidelines did SOX create for companies?

The Sarbanes-Oxley Act (SOX) introduced several new corporate governance guidelines for companies. These guidelines were designed to improve the quality of financial disclosures and reports, and to increase the responsibility of senior executives. SOX also limited the services that auditors can offer to publicly traded clients and made audit committees more independent from the companies they work for. In addition, SOX established the Public Company Accounting Oversight Board, a nonprofit corporation tasked with overseeing and regulating all auditing practices related to publicly traded companies. For senior corporate managers, SOX required them to certify the accuracy of the company's financial disclosures, report financial transactions quickly, disclose off-balance sheet transactions, and be more transparent with pro forma disclosures. SOX also mandated that senior managers include a statement in all annual reports stating that management is responsible for implementing and assessing adequate internal controls. Furthermore, it required businesses to disclose whether they have an ethics code for their senior financial officers and to prevent company loans to directors or officers.