Sarbanes-Oxley (SOX) Compliance Explained
Question
Which statement about Sarbanes-Oxley (SOX) is true?
Answers
Explanations
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A. B. C. D. E.B.
The correct answer is B. SOX is a US law.
Explanation: The Sarbanes-Oxley Act (SOX) is a federal law passed in the United States in 2002. It is also known as the Public Company Accounting Reform and Investor Protection Act or the Corporate and Auditing Accountability and Responsibility Act. The act was enacted in response to a series of corporate accounting scandals, such as Enron and WorldCom, that occurred in the early 2000s. SOX was designed to improve the accuracy and reliability of corporate financial reporting, as well as to increase transparency and accountability in publicly traded companies.
Option A is incorrect because SOX is not an IETF (Internet Engineering Task Force) compliance procedure for computer systems security. The IETF is a large open international community of network designers, operators, vendors, and researchers concerned with the evolution of the Internet architecture and the smooth operation of the Internet.
Option C is also incorrect because SOX is not an IEEE (Institute of Electrical and Electronics Engineers) compliance procedure for IT management to produce audit reports. IEEE is a professional association for engineers in various fields of electrical engineering, electronics, and computer science.
Option D is incorrect because SOX is not a private organization that provides best practices for financial institution computer systems. Instead, it is a federal law that provides a framework for financial reporting and accountability in publicly traded companies.
Option E is also incorrect because Section 404 of SOX is not only related to IT compliance. Section 404 requires companies to assess and report on the effectiveness of their internal controls over financial reporting, which includes IT controls but is not limited to them.
In summary, the correct statement about SOX is that it is a US federal law passed in 2002 to improve the accuracy and reliability of corporate financial reporting and to increase transparency and accountability in publicly traded companies.
