312-50V13 Question #211: Real Exam Question with Answer & Explanation

Question

Widespread fraud ac Enron. WorldCom, and Tyco led to the creation of a law that was designed to improve the accuracy and accountability of corporate disclosures. It covers accounting firms and third parties that provide financial services to some organizations and came into effect in 2002. This law is known by what acronym?

Options

• AFed RAMP
• BPCIDSS
• CSOX
• DHIPAA

Explanation

SOX (Sarbanes-Oxley Act) is the correct answer because it was enacted in 2002 directly in response to the high-profile corporate accounting scandals at Enron, WorldCom, and Tyco. It mandates strict financial reporting standards, internal controls, and accountability for executives and auditing firms to protect investors and the public.

Why the others are wrong:

• FedRAMP is a U.S. government framework for cloud service security assessments - unrelated to corporate fraud.
• PCI DSS (Payment Card Industry Data Security Standard) is a standard for protecting credit card data, not corporate accounting practices.
• HIPAA (Health Insurance Portability and Accountability Act) governs the privacy and security of medical health information.

Memory Tip: Think SOX = Scandals, Oversight, eXecutives - it was born from corporate scandals to enforce oversight of executives and their financial disclosures. You can also remember that SOX "put socks" on corporate fraud to keep it in check!

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