AS midterm

The Sarbanes-Oxley Act was created after the failures of the once respected businesses like Enron and WorldCom. It was created to strengthen the consumers' confidence in the capital market. It achieved this by mandating top managers to personally certify the accuracy of financial reports, established the Public Company Accounting Oversight Board, strengthened disclosure requirements, required companies to perform internal control audits, and enacted harsh penalties for committing fraud or knowingly submitting false statements. These changes made committing fraud more difficult, gave better punishments for managers who let fraud happen, and gave information to the consumers that allowed for their confidence to come back after the disasters of previous businesses. It also created standardization of processes, improved documentation, and forced businesses to consider about how to tighten internal controls. It has been a largely successful act that has strengthened the responsibility and ethics of businesses and managers. I has also changed the relationship between the company and the auditor. Finally, it sparked the corporate responsibility movement that has caused behavioral changes that have reduced the number of financial accounting scandals in past few years.