Understanding the Sarbanes-Oxley Act—A valued added approach for public interest

There has been an explosion of renewed interest in ethical behavior. This attention has been the result of the continuous notoriety of the corporate, community, and educational misdeeds. This trend has called for increased corporate governance and accountability. This interest has been fueled by the wrongdoings at Enron, WorldCom, Martha Stewart, Tyco, Citigroup, Qwest, Arthur Andersen, and Adlephia, to name a few. To mitigate these activities, an effort is underway to reestablish public confidence and impose additional requirements to enhance financial reporting and disclosure. This endeavor includes the passage of the Sarbanes-Oxley Act on 30 July 2002. This act establishes new substantive and procedural requirements for public companies, their officers and directors with the intent to improve the quality of financial reporting, disclosure, and auditing. In short, public interest is taken into consideration. In this study, the 11 titles of the act are examined and interpreted as to their impact.