Definition: The Sarbanes-Oxley Act of 2002 was enacted to “protect investors by improving the accuracy and reliability of corporate disclosures made pursuant to the securities laws, and for other purposes” (Sarbanes-Oxley Act of 2002, Report 107-610).

Overview

The Sarbanes–Oxley Act of 2002 was a response to the financial reporting and disclosure problems associated with companies such as Enron, whose 2001 collapse was the largest bankruptcy in US history. This large and complex act pertains to corporate governance practices in public companies and contains eleven titles:

1. Public company accounting oversight board

2. Auditor independence

3. Corporate responsibility

4. Enhanced financial disclosures

5. Analyst conflicts of interest

6. Commission resources and authority

7. Studies and reports

8. Corporate and criminal fraud accountability

9. White-collar crime penalty enhancements

10. Corporate tax returns

11. Corporate fraud and accountability

While the act is wide-reaching in scope and focuses on corporate and executive accountability for financial data, the maintenance of internal control structures, and the role of accounting firms in the audit process, for the CIO or IT professional it does not contain any specific systems requirements and in fact never even mentions the word computer in its 66 pages. However, it is clear that technology and information systems will be central to corporate compliance with the act.

The eleven titles of the act contain 69 sections, several of which are regarded as key from a CIO's perspective, including the following.