Which act protects the public and shareholders from accounting errors and illegal practices?

The Sarbanes-Oxley Act (SOX) is designed specifically to protect the public and shareholders from accounting errors, fraud, and illegal practices in financial reporting. Enacted in response to high-profile corporate scandals, its primary focus is to enhance transparency in financial disclosures and hold companies accountable. SOX imposes strict regulations on financial practices and sets guidelines for public company boards, management, and accounting firms.

The act also establishes requirements for the accuracy of financial records, mandates regular audits, and creates penalties for fraudulent activities. By enhancing the reliability of corporate financial statements, SOX aims to restore public trust in the integrity of the financial system and protect investors. The relevance of SOX is particularly significant in the context of corporate governance and compliance, making it a crucial piece of legislation in the accounting and business fields.