Sarbanes-Oxley Act

What Does Sarbanes-Oxley Act Mean?

The Sarbanes-Oxley Act (also abbreviated SOX), is a US Federal law enacted on July 30, 2002 that set a broad range of new standards for public companies, boards and accounting firms. It establishes a Public Company Accounting Oversight Board (PCAOB) to oversee the auditors of public companies. The Sarbanes-Oxley Act does not apply to privately held companies.


The Act also goes by the titles: Public Company Accounting Reform and Investor Protection Act by the US Senate; Corporate and Auditing Accountability and Responsibility Act by the US House of Representatives; and is also commonly referred to as Sarbanes–Oxley or Sarbox.

Techopedia Explains Sarbanes-Oxley Act

Sarbanes-Oxley was/is an effort to help prevent such accounting scandals in the aftermath of those occurring at Enron, WorldCom, Adelphia, Peregrine Systems and Tyco International. These scandals diminished trust in US corporations and cost investors billions of dollars when share prices collapsed and the nation’s security markets were severely shaken.

While this is a legal/business concept, it is important to an IT professional as a result of the huge amount of work spent by large corporations in complying with the law. Years following the Act were very good for consultants with the skills to assist large corporations with the transition.


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Margaret Rouse

Margaret Rouse is an award-winning technical writer and teacher known for her ability to explain complex technical subjects to a non-technical, business audience. Over the past twenty years her explanations have appeared on TechTarget websites and she's been cited as an authority in articles by the New York Times, Time Magazine, USA Today, ZDNet, PC Magazine and Discovery Magazine.Margaret's idea of a fun day is helping IT and business professionals learn to speak each other’s highly specialized languages. If you have a suggestion for a new definition or how to improve a technical explanation, please email Margaret or contact her…