What Was the Motivating Factor in Passing the Sarbanes-Oxley Act

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The Answer is The motivating factor in passing the Sarbanes-Oxley Act was to address the corporate accounting scandals that occurred in the early 2000s, such as Enron and WorldCom. These scandals revealed widespread corporate fraud and accounting irregularities, which led to a loss of investor confidence and a significant impact on the financial markets.

The major provisions of the Sarbanes-Oxley Act with respect to financial statements include:
1. Establishment of the Public Company Accounting Oversight Board (PCAOB) to oversee the auditing profession and set auditing standards for public companies.
2. Requirement for CEOs and CFOs to certify the accuracy of financial statements and disclosures in quarterly and annual reports.
3. Mandate for companies to establish and maintain internal controls over financial reporting to ensure the accuracy and reliability of financial statements.
4. Prohibition on certain types of non-audit services provided by auditors to their audit clients to maintain independence and objectivity.
5. Requirement for companies to disclose off-balance sheet transactions and other relationships that may have a material effect on financial condition.

Overall, the Sarbanes-Oxley Act aimed to improve transparency, accountability, and integrity in financial reporting to protect investors and restore confidence in the financial markets.

What Was the Motivating Factor in Passing the Sarbanes-Oxley Act

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What Was the Motivating Factor in Passing the Sarbanes-Oxley Act

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Correct Answer:
Answered by ExamLex AI