The Sarbanes-Oxley Act is intended to strengthen protection against:

• A. Tax evasion by individual taxpayers
• B. Environmental pollution by corporations
• C. Unfair labor practices
• D. Corporate fraud and financial misreporting

Answer: (D)

Verified step by step guidance

1. Understand the purpose of the Sarbanes-Oxley Act (SOX): It was enacted in 2002 in response to major corporate scandals (e.g., Enron, WorldCom) to improve corporate governance and accountability.
2. Recognize the key focus of SOX: The act is designed to prevent corporate fraud and financial misreporting by implementing stricter regulations and oversight mechanisms for public companies.
3. Identify the mechanisms introduced by SOX: These include requirements for accurate financial reporting, internal controls, and independent audits to ensure transparency and accountability.
4. Clarify what SOX does not address: The act does not focus on tax evasion, environmental pollution, or unfair labor practices, as these are governed by other laws and regulations.
5. Conclude that the correct answer is corporate fraud and financial misreporting, as SOX specifically targets these issues to protect investors and restore trust in financial markets.