The Sarbanes-Oxley Act is a reform which was passed in 2002 after the failure and defection of large corporate giants like World Com and Enron. The act is commonly known as SOX or Sarbox and focuses on improving the public interest and trust in the financial reporting of the companies. It enforces enhanced rules and regulations which need to be followed by the corporation and their Board of Directors. The act however till now does not apply to the private companies, but is focused on the public companies. The act states the various responsibilities for the corporate board of directors and depicts the specific criminal [penalties that they can be subject to in the case of non compliance. The Securities and Exchange Commission is also given ruling power over the corporations.
One main characteristic of the act is that internal control is enforced and the board and the CEO are all made responsible for their actions. The senior management is also made responsible for their specific action. Aside from this the auditors are given independence in their interrogation and monitoring of the corporations operations for security purposes.