Has the Goal of Sarbanes-Oxley Been Achieved?

Allan B. Afterman, PhD, CPA

It is generally agreed that the Sarbanes-Oxley Act of 2002 (SOX) was enacted largely as a response to a handful of massive accounting scandals (e.g., Enron, WorldCom, Tyco). Thus, its principal purpose was to restore trust in the U.S. capital markets by increasing the reliability of corporate financial reports. The primary means for doing so were 1) to create the PCAOB to raise the quality of corporate audits; 2) to require major changes in corporate governance, especially by audit committees, to heighten the level of board oversight; and 3) to require greater CEO and CFO responsibility and accountability for financial disclosures and internal controls over financial reporting.