Acronyms, Abbreviations, and Initialisms
|Short Form||Full Form|
|SEC||Securities and Exchange Commission|
In 2002, the United States (U.S.) Congress passed the Sarbanes-Oxley (SOX) Act to protect shareholders and the general public from accounting errors and fraudulent practices in enterprises, and to improve the accuracy of corporate disclosures.
The act does not specify a set of business practices but instead defines which company records need to be kept on file and for how long.
SOX is also known as the "Public Company Accounting Reform and Investor Protection Act of 2002." SOX provisions apply to publicly-traded U.S. companies and their auditors. Privately-held companies don't need to comply with the reporting requirements, but they are subject to the penalty and liability provisions.
The Securities and Exchange Commission (SEC) enforces SOX. SOX imposes criminal penalties for certifying a misleading or fraudulent financial report, which can be upwards of $5 million in fines and 20 years in prison when someone willfully certifies misleading or fraudulent financial statements.
- SOX protects from accounting errors and fraudulent practices.