What was the impetus behind the Sarbanes-Oxley Act?
The US Sarbanes-Oxley Act was passed in the wake of a myriad of corporate scandals that broke as a result of skewed reporting of selected financial transactions. Companies such as Enron, WorldCom and Tyco covered up or misrepresented a variety of questionable transactions, resulting in huge losses to stakeholders and a crisis in investor confidence. The legislation had been in the mind of US Senator Paul S. Sarbanes for some time, prompted by the failure at Enron. It languished in the face of strong opposition until the WorldCom debacle made it politically imperative for the US government to take action.
