The Sarbanes-Oxley Act was created to protect investors by improving the accuracy and reliability of corporate disclosures. The act covers issues such as establishing a public company accounting oversight board, auditor independence, corporate responsibility and enhanced financial disclosure.
Officially titled the Public Company Accounting Reform and Investor Protection Act of 2002 and commonly called SOX or Sarbox, it was signed into law on July 30, 2002 by President Bush. It was designed to review the dated legislative audit requirements, and is considered the most significant change to federal securities laws in the United States since the New Deal in the 1930s.
The act came in the wake of a series of corporate financial scandals, including those affecting Enron, Tyco International, and WorldCom (now MCI). The law is named after sponsors Senator Paul Sarbanes (D-MD) and Representative Michael G. Oxley (R-OH). It was approved by the House by a vote of 423-3 and by the Senate 99-0.
An brief outline of the history of the law is as follows:
The House passed Representative Oxley's bill (H.R. 3763) on April 25, 2002, by a vote of 334 to 90. The House then referred the "Corporate and Auditing Accountability, Responsibility, and Transparency Act" or "CAARTA" to the Senate Banking Committee with the support of President Bush and the SEC. At the time, however, the Chairman of that Committee, Senator Paul Sarbanes (D-Md.), was preparing his own proposal: Senate Bill 2673.
Senator Sarbanes’s bill passed the Senate Banking Committee on June 18, 2002, by a vote of seventeen to four. On June 25, 2002, WorldCom revealed that it had overstated its earnings by more than $3.8 billion during the past five quarters, primarily by improperly accounting for its operating costs. Senator Sarbanes introduced Senate Bill 2673 to the full Senate that very same day and it passed ninety-seven to zero less than three weeks later on July 15, 2002.
The House and the Senate formed a Conference Committee to reconcile the differences between Senator Sarbanes's bill (S. 2673) and Representative Oxley's bill (H.R. 3763). The conference committee relied heavily on Senate Bill 2673 and “most changes made by the conference committee strengthened the prescriptions of S. 2673 or added new prescriptions.” John T. Bostelman, The Sarbanes-Oxley Deskbook § 2-31.
The Committee approved the final conference bill on July 24, 2002 and gave it the name "the Sarbanes-Oxley Act of 2002." The next day, both houses of Congress voted on it without change, producing an overwhelming margin of victory: 423 to 3 in the House and 99 to 0 in the Senate. On July 30, 2002, President George W. Bush signed it into law, stating that that it included "the most far-reaching reforms of American business practices since the time of Franklin Delano Roosevelt." Elisabeth Bumiller, Bush Signs Bill Aimed at Fraud in Corporations, N.Y. Times, July 31, 2002, at A1.
http://en.wikipedia.org/wiki/Sarbanes_oxley
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