The Sarbanes-Oxley (SOX) Act of 2002 is a congressional act passed to prevent future scandals of Enron proportion and is considered to be one of the most significant changes to federal securities law in the United States. The Enron scandal and other similar scandals damaged investors’ confidence in the accuracy of all public corporate financial statements. Among the major provisions of the Act are criminal and civil penalties for securities violations, as well as increased disclosure regarding executive compensation, insider trading and financial statements.
In lay terms, the SOX act essentially says that you will go to jail if you are signing off on the veracity of certain documents in a public corporation and they turn out to be incorrect, even if it wasn’t really your fault. It requires certain executives at the top to sign off on the financial statements that stockholders typically examine before buying a stock. This potentially exposes those top executives to the risk of jail time.
As you might expect, the CEOs, CFOs and other executives of publicly traded companies take SOX very seriously. When a CEO takes something seriously, it typically means finding some other person in the company, or several, and requiring them to take the issue even more seriously — and that’s just what CEOs have done with SOX. It’s considered “delegation of responsibility,” “buck-passing” or “things rolling downhill” — depending on one’s point of view.
This is probably where you come in.
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