The Sarbanes-Oxley Act: A Dozen Years Later, Taking Stock

The Sarbanes-Oxley Act of 2002 (more often known as SOX) was enacted after Congress took note of a series of corporate scandals such as Enron, Tyco International Ltd. (NYSE:TYC), WorldCom and others, in which investors relied upon the efficacy of financial reporting and accounting, but subsequent events belied their trust. The companies involved, and their stocks, imploded, inflicting grievous financial losses on the investors.

The Sarbanes-Oxley Act accordingly redefined the reporting responsibilities of company management as well as their relationship with professional accounting firms in their role as auditors of those companies. In fact, in...