The Sarbanes-Oxley Act of 2002, or SOX,is a U.S. federal law enacted to enhance corporate transparency and prevent fraudulent financial practices. It was introduced in response to major corporate scandals to protect shareholders and the public by improving the accuracy and reliability of corporate disclosures.

SOX mandates strict requirements for financial reporting, internal controls, and auditing practices. Companies must establish processes to ensure financial data integrity and certify its accuracy, often requiring robust IT systems to track and safeguard relevant information. Key provisions include management’s responsibility for internal controls, auditor independence, and penalties for non-compliance, making SOX compliance a critical aspect of corporate governance for publicly traded companies.