Digital Forensic Certification Practice Exam

What does SOX stand for in the context of corporate governance?

1. Sarbanes-Oxley Act

2. Standard Operations Act

3. State Oversight Act

4. Secure Online Exchange

The correct answer is: Sarbanes-Oxley Act

In the context of corporate governance, SOX stands for the Sarbanes-Oxley Act. This legislation was enacted in response to major financial scandals, such as those involving Enron and WorldCom, which highlighted the need for greater accountability in financial reporting and corporate governance. The Sarbanes-Oxley Act introduced significant reforms to enhance the accuracy and reliability of corporate disclosures. The Act aims to protect investors by improving the transparency of financial reporting, establishing stricter penalties for fraudulent financial activity, and enhancing the responsibilities of senior management regarding the verification of financial statements. Key provisions include the requirement for companies to establish internal controls and for executives to certify the accuracy of financial reports. This has had a profound impact on how publicly traded companies manage their financial reporting processes and corporate governance practices. The other options listed do not relate to established regulations or frameworks within corporate governance and therefore do not fulfill the context of the question relating to SOX.