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The Sarbanes-Oxley Act (SOX)

Sarbanes-Oxley Act is the regulations passed by Congrees in 2002 to try to reduce unethical corporate behavior. SOX imposes more responsibilities on corporate executives and boards of directors to ensure that companies’ internal controls are reliable and effective. Under one part of the law, companies must develop sound principles of control over financial reporting. They must continually verify that these controls are working. In addition, independent outside auditors must attest to the level of internal control. SOX also created the “Public Company Accounting Oversight Board (PCAOB)” which now establishes auditing standards and regulates auditor activity.

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