<Ul> <Li> </Li> <Li> </Li> <Li> </Li> </Ul> <P> The Sarbanes--Oxley Act of 2002 (Pub. L. 107--204, 116 Stat. 745, enacted July 30, 2002), also known as the "Public Company Accounting Reform and Investor Protection Act" (in the Senate) and "Corporate and Auditing Accountability, Responsibility, and Transparency Act" (in the House) and more commonly called Sarbanes--Oxley, Sarbox or SOX, is a United States federal law that set new or expanded requirements for all U.S. public company boards, management and public accounting firms . There are also a number of provisions of the Act that also apply to privately held companies; for example, the willful destruction of evidence to impede a Federal investigation . </P> <P> The bill, which contains eleven sections, was enacted as a reaction to a number of major corporate and accounting scandals, including Enron and WorldCom . The sections of the bill cover responsibilities of a public corporation's board of directors, adds criminal penalties for certain misconduct, and required the Securities and Exchange Commission to create regulations to define how public corporations are to comply with the law . </P> <P> In 2002, Sarbanes--Oxley was named after bill sponsors U.S. Senator Paul Sarbanes (D - MD) and U.S. Representative Michael G. Oxley (R - OH). As a result of SOX, top management must individually certify the accuracy of financial information . In addition, penalties for fraudulent financial activity are much more severe . Also, SOX increased the oversight role of boards of directors and the independence of the outside auditors who review the accuracy of corporate financial statements . </P>

The sarbanes-oxley act of 2002 is a governmental response to