The Sarbanes-Oxley Actof 2002 has been defined as the most far-reaching U. S. securities legislation in years. All companies that file reports with the Securities and Exchange Commission (SEC) have increased responsibilities and corporate obligation. Non-compliance of the Act attracts significant penalties on company boards.

The Public Company Accounting Oversight Board was established to oversee the audit of public companies. The board has the power to inspect, investigate and enforce compliance from companies. They also set standards and rules for audit reports. It is mandatory for all companies to register with the Oversight Board.

Auditors have been provided with a list of non-audit services that they are not permitted to perform during an audit. A one-year waiting period has been imposed on audit firm employees who leave an accounting firm to join a former client.

All transactions that affect the financial status of the company must be disclosed. Executives and directors of companies are prohibited from taking personal loans. All annual reports must include an undertaking, which states that the management is responsible for the internal control structure and financial reports.

Any alteration, destruction, concealment or falsification of records or documents is subject to fines and up to 20 years imprisonment. All audit worksheets must be retained for five years.

Research analysts who make public appearances or offer research reports must disclose of any conflicts of interest. These disclosures must contain information about the company that is the subject of the appearance or report. The analyst must disclose if he or she holds any securities in the company or has received corporate compensation. Brokers and dealers must disclose any public company that may be a client of their firm.

Minimum standards have been set with regards to professional conduct of attorneys who represent public companies before the Securities Exchange Commission. A section of the Sarbanes-Oxley law requires attorneys to report securities violations to the CEO.

The concurrent opinion amongst the lawmakers and the media in this country is that the Sarbanes-Oxley Act has been successful in enforcing discipline and ethics amongst companies.