The Sarbanes-Oxley Act of 2002 requires that the annual reports of public corporations include reports by management as well as the external auditors, certifying the adequacy and effectiveness of the company’s internal controls. The Sarbanes-Oxley Act requires public corporations to maintain strong and effective internal controls and to report on those controls in order to deter fraud and to help prevent misleading information from being published in annual reports.
Do you think the requirements of the Sarbanes-Oxley Act will deter fraud? Why or why not? Do you think the reports by management and the external auditors will give confidence to stockholders that a company’s financial information is good, quality information? Why or why not?