Definition

SOX

SOX, the Sarbanes-Oxley Act of 2002, is the US law that holds public company executives accountable for the accuracy of their financial statements and the controls behind them. Congress passed it after major accounting scandals to rebuild investor trust. Section 302 makes the CEO and CFO personally certify the reports, while Section 404 requires management to assess internal control over financial reporting and, for larger filers, requires the external auditor to attest to it as well. Compliance drives a yearly cycle of documenting, testing, and remediating controls. Penalties for knowing violations reach into criminal territory, which is why boards treat SOX as a governance priority.