AUTHORS: Miller/Prentice/Bredeson - ©2010
Enron was once the seventh-largest company on the Fortune 500. Yet, in the wake of revelations of accounting irregularities and securities fraud, it became entangled in the greatest business scandal of a generation and was essentially blinked out of existence after declaring bankruptcy. Similar accounting scandals at Global Crossing, Tyco, WorldCom, Adelphia, HealthSouth, and other companies prompted Congress to pass the Sarbanes-Oxley Act (SOX) in June 2002. This revolutionary act, which embodies the most significant securities law changes since the original federal securities laws of 1933 and 1934, contains provisions that create a new federal agency, restructure the entire accounting industry, reform Wall Street practices, dramatically alter corporate governance practices here and abroad, and attack insider trading and obstruction of justice. A lot has happened since its passage. The Public Company Accounting Oversight Board (PCAOB) has come into being, and the PCAOB and the Securities Exchange Commission (SEC) have issued countless rules to implement the SOX's many legislative mandates. This short guide focuses not only on what each part and section of the SOX means but also on what businesses need to know now that is has been implemented.