How does the Sarbanes-Oxley Act 2002 impact boards of directors?

Answer 1

The Sarbanes-Oxley Act of 2002 significantly impacts boards of directors by imposing stricter regulations on corporate governance and financial reporting. It mandates that boards establish independent audit committees, enhancing oversight of financial practices and ensuring accountability. Additionally, it requires board members to certify the accuracy of financial statements, which increases their responsibility and liability in the event of corporate fraud or mismanagement. Overall, the act aims to improve transparency and restore investor confidence in the wake of corporate scandals.