Question

In 200 words or more, Describe how the Sarbanes-Oxley Act affects corporate governance. Give an example

Answer 1

The Sarbanes-Oxley Act was an act that was put into place to help prevent fraud and established rules to help to improve corporate governance and add transparency to the operations of the business to both employees and shareholders. Some of the ways that the act improved corporate governance is that it made it so that the CEO and CFO of a public company must submit annual and quarterly reports to keep everyone abreast on the financial status of the company. If there is a noncompliance issue in regard to the financial status report, then the CEO or CFO are mandated to reimburse the company for any profits lost that was a direct effect of their noncompliance. Other rules are that public companies cannot give personal loans to their directors of executive officers, the penalty for tampering with evidence of an organizational crime is now punishable up to 20 years and also has a monetary fine attached to it. If anyone has been found in violation of any of these rules, then that person can be barred from acting as an officer of director.