CCSP · Question #17
SOX was enacted because of which of the following?
The correct answer is D. All of the above. The Sarbanes-Oxley Act (SOX) was enacted in response to major corporate and accounting scandals, addressing systemic issues including poor board oversight, inadequate independent auditing, and weak internal financial controls.
Question
SOX was enacted because of which of the following?
Options
- APoor BOD oversight
- BLack of independent audits
- CPoor financial controls
- DAll of the above
How the community answered
(39 responses)- A3% (1)
- B5% (2)
- C3% (1)
- D90% (35)
Why each option
The Sarbanes-Oxley Act (SOX) was enacted in response to major corporate and accounting scandals, addressing systemic issues including poor board oversight, inadequate independent auditing, and weak internal financial controls.
Poor BOD oversight was one *specific* reason among several that contributed to the need for SOX, but not the *only* reason.
Lack of independent audits was another *specific* reason addressed by SOX, but not the *only* reason.
Poor financial controls were a significant *specific* issue SOX aimed to fix, but not the *only* cause for its enactment.
The Sarbanes-Oxley Act (SOX) of 2002 was a direct response to major corporate accounting scandals, such as Enron and WorldCom. These scandals revealed systemic failures, including a lack of effective board of directors (BOD) oversight, the absence of truly independent audits, and critically, poor or non-existent internal financial controls within organizations, all of which SOX aimed to rectify.
Concept tested: Sarbanes-Oxley Act (SOX) origins
Source: https://www.sec.gov/news/press/2002-126.htm
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