What significant legislation was enacted in 2002 in response to accounting scandals?

The Sarbanes-Oxley Act (SOX) was enacted in 2002 as a direct response to a wave of accounting scandals that plagued major corporations, most notably Enron and WorldCom. This legislation aimed to enhance the accuracy and reliability of corporate disclosures made pursuant to the securities laws. One of its primary objectives is to protect investors by improving the transparency of financial reporting.

Key provisions of SOX include the requirement for greater accountability in financial reporting, the establishment of the Public Company Accounting Oversight Board (PCAOB) to oversee the audits of public companies, and the mandate for top management to certify the accuracy of financial information. By implementing stricter penalties for fraudulent financial activity and bringing more oversight to the accounting profession, SOX helps to restore public trust in the financial markets.

The other legislation mentioned serves different purposes. The Foreign Corrupt Practices Act targets bribery in foreign business transactions. The Gramm-Leach-Bliley Act pertains primarily to the financial sector's structure and regulation rather than direct accounting practices. Meanwhile, the Dodd-Frank Wall Street Reform Act, enacted later in 2010, focuses on reducing risks in the financial system following the 2008 financial crisis, addressing issues like consumer protection and derivatives trading. Thus