Among the most critical laws impacting public corporations passed in years is the Sarbanes-Oxley Act of 2002 — referred to as SOA throughout this paper — enacted on July 30, 2002 and signed into law by President George W. Bush. SOA was created by Congress in the wake of the major corporate accounting scandals that occurred in 2001 and 2002, notably Enron & Tyco, in an effort to restore investor confidence and to improve corporate governance and financial ransparency.
There are many elements to SOA, including sections that were intended to enhance and tighten financial disclosures, improve “whistle-blower” processes and the well-known requirement for the corporation’s financial statements to be certified by the CEO and CFO. Very importantly, SOA also creates and expands on existing criminal penalties for misrepresentations. No longer will “I didn’t know” provide any legal protection for management.
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