Business Ethics and Corporate Governance, Second Edition

THE AMERICAN LAW GOVERNING AUDITORS’ RESPONSIBILITIES

Sarbanes’ Oxley Act (SOX) was passed by the US Congress in 2002 with an aim to protect the investors from the fraudulent accounting practices of corporations.

Important provisions contained in SOX Act regarding auditors are given below:

• Establishment of Public Company Accounting Oversight Board (PCAOB): The SOX Act created a new board consisting of five members of whom only two will be certified public accountants. All accounting firms will have to register themselves with this board and submit inter alia particulars of fees received from public company clients for audit and non-audit services, financial information about the firm, list of firm’s staff who participate in the audit. The board ...