The Sarbanes-Oxley Act of 2002 aimed to protect investors by improving corporate disclosure and financial reporting. It established the Public Company Accounting Oversight Board to regulate auditing firms and audit quality. It also prohibited auditors from providing non-audit services, required lead auditors to rotate every 5 years, and mandated that companies have independent audit committees responsible for overseeing audits. Additionally, the Act required CEOs and CFOs to certify financial reports and mandated internal controls and procedures for reporting accounting irregularities.

1. Sarbanes Oxley Act (2002)
The Sarbanes Oxley Act was enacted in the year 2002 with a view to protect investors by
improving the accuracy and reliability of corporate disclosures made pursuant to the securities
laws and for other purposes. Some of the main provisions of the Act are:-
1.The Act called for establishment of the Public Company A/cing Oversight Board,
whose duties are to:-
•register and regulate all public accounting firms that prepare audit reports;
•establish or adopt, or both, by rule, auditing, quality control, ethics, independence,
and other standards relating to the preparation of audit reports;
•conduct inspections of registered public accounting firms;
•conduct investigations and disciplinary proceedings concerning, and impose
appropriate sanctions where justified upon, registered public accounting firms and
associated persons of such firms;
•perform such other duties or functions as the Board determines are necessary or appropriate
to promote high professional standards among, and improve the quality of audit services
offered by, registered public accounting firms and associated persons thereof, or otherwise to
carry out this Act, in order to protect investors, or to further the public interest;
•enforce compliance with professional standards, and the securities laws relating to the
preparation and issuance of audit reports and the obligations and liabilities of accountants with
respect thereto, by registered public accounting firms and associated persons thereof; and set
the budget and manage the operations of the Board and the staff of the Board.

2. 2. It prohibits any public accounting firm from providing non-audit
services while auditing firm. These services include:-
• bookkeeping or other services related to the accounting
records or financial statements of the audit client;
• financial information systems design and implementation;
• appraisal or valuation services, fairness opinions, or
contribution-in-kind reports;
• actuarial services;
• internal audit outsourcing services;
• management functions or human resources;
• broker or dealer, investment adviser, or investment banking
services;
• legal services and expert services unrelated to the audit; and
• any other service that the Board determines, by regulation, is
impermissible.

3. 3. The lead audit and reviewing partner must rotate off the audit every 5
years. It shall be unlawful for a registered public accounting firm to
provide audit services to an issuer if the lead (or coordinating) audit
partner (having primary responsibility for the audit), or the audit
partner responsible for reviewing the audit, has performed audit
services for that issuer in each of the 5 previous fiscal years.
4. The Act calls for the formation of an independent and competent audit committee,
which is directly responsible for the appointment, compensation, and oversight of
the work of any registered public accounting firm and of auditor's activities. It
requires that each member of a firm’s audit committee be a member of the board
of directors and be 'independent'. In order to be considered independent, a
member of an audit committee may not accept any consulting, advisory, or other
compensatory fee from the issuer; or be an affiliated person of the issuer or any
subsidiary thereof.
5. Each registered public accounting firm that performs for any issuer any audit shall
timely report to the audit committee of the issuer:- (i) all critical accounting
policies and practices to be used; (ii) all alternative treatments of financial
information within generally accepted accounting principles that have been
discussed with management officials of the issuer, ramifications of the use of such
alternative disclosures and treatments, and the treatment preferred by the
registered public accounting firm; and (iii) other material written communications
between the registered public accounting firm and the management of the issuer,
such as any management letter or schedule of unadjusted differences.

4. 6. Each audit committee shall establish procedures for:- (i) the receipt, retention
and treatment of complaints received by the issuer regarding accounting,
internal accounting controls, or auditing matters; and (ii) the confidential,
anonymous submission by employees of the issuer of concerns regarding
questionable accounting or auditing matters.
7. The Act requires that the principal executive officer or officers and the principal
financial officer or officers, or persons performing similar functions, to certify
that the financial statements accurately and fairly represent the financial
condition and results of operations of the company, in each annual or quarterly
report filed or submitted.
8. The Act requires rapid disclosure of material changes in the financial conditions
or operations of the firm, which may include trend and qualitative information
and graphic presentations, as necessary or useful for the protection of investors
and in the public interest.
9. It prohibits loans to any of the firm’s directors or executives. It shall be
unlawful for any issuer to extend or maintain credit, to arrange for the
extension of credit, or to renew an extension of credit, in the form of a
personal loan to or for any director or executive officer (or equivalent thereof)
of that issuer.
10. It requires that each annual report contain an internal control report. This
report shall state the responsibility of management for establishing and
implementing adequate procedures for financial reporting, as well as contain
an assessment of effectiveness of internal control structure and procedures,
any code of ethics and contents of that code.