Sarbanes-Oxley act

Oversight board

The five-member (two accountants) Public Company Accounting Oversight Board has the authority to establish standards dealing with auditing, quality control, ethics, independence, and other activities relating to the preparation of audit reports or can choose to delegate these responsibilities to the AICPA. Before the act, AICPA set auditing standards. The SEC has oversight and enforcement authority

Corporate executive accountability

Corporate execs must personally certify the financial statements and company disclosures with severe financial penalties and the possibility of imprisonment for fraudulent misstatements.

Non-audit Services

The law makes it unlawful for the auditors of public companies to perform various non-audit services for audit clients. Prohibited services include bookkeeping, internal audit outsourcing, appraisal or valuation services, and other various consulting services. Other nonauditing services, including tax services, require preapproval by the audit committee of the company being audited.

Retention of work papers

Auditors of public companies must retain all audit or review work papers for seven years or face the threat of a prison term for willful violations