Undeposited Funds Account

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Definition / Meaning of

Sarbanes-Oxley Act Of 2002

Categories: Finance,

Named after its main Congressional sponsors, Senator Paul Sarbanes and representative Michael Oxley, the Sarbanes-Oxley Act of 2002 introduced new financial practices and reporting requirements, including executive certification of financial reports, plus more stringent corporate governance procedures for publicly traded US companies and added protections for whistleblowers. Also known as the Corporate and Auditing accountability, Responsibility, and Transparency Act, or more colloquially as SarbOx or SOX, the law was passed in response to several high-profile corporate scandals involving accounting fraud and corruption in major Us corporations.The law also created the public company accounting oversight board (PCAOB), a private-sector, nonprofit corporation that regulates and oversees public accounting firms.The law has seen its share of controversy, with opponents arguing that the expense and effort involved in complying with the law reduce shareholder value, and proponents arguing that increased corporate responsibility and transparency far outweigh the costs of compliance.