Sarsbanes Oxley Act of 2002
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The Sarsbanes-Oxley Act of 2002
On July 30, 2002, the Sarsbanes-Oxley Act of 2002 was signed into law by President George W. Bush. This act not only affects large accounting firms but also CPAs who are auditors for publicly traded companies. Congress passed this act to establish an oversight board to regulate the public accounting firms that audit public companies. It also requires the the adoption of new auditor and audit committee independence standards, requires executive officers of public companies to certify the company's SEC reports, restricts trading by directors and executives during benefit plan blackout periods, increases the liability for violations of the federal securities laws by public companies, their management and others and imposes additional obligations on attorneys to report securities law violations and conflicts of interest.
The PCAOB is the accronym for the "Public Company Accounting Oversight Board". This board is constructed of five full-time members who are all under five year terms. It consists of two current or former CPAs and three other members. The other three cannot be, or ever have been CPAs at any point in time. The chair may be held by one of the two CPA members...