Which law provides rules related to the creation of financial statements to help avoid fraud?

• A. Sarbanes-Oxley Act
• B. Securities Act of 1933
• C. Dodd-Frank Act
• D. Gramm-Leach-Bliley Act

Answer: (A)

Verified step by step guidance

1. Understand the context of the question: It is asking about a law that governs the creation of financial statements to prevent fraud. This requires knowledge of financial regulations and their purposes.
2. Review the Sarbanes-Oxley Act: This law was enacted in 2002 in response to major corporate scandals (e.g., Enron, WorldCom). It focuses on improving corporate governance, internal controls, and the accuracy of financial reporting to prevent fraud.
3. Examine the Securities Act of 1933: This law primarily deals with the regulation of securities offerings and requires companies to provide truthful information to investors, but it does not specifically focus on financial statement fraud prevention.
4. Consider the Dodd-Frank Act: This law, enacted in 2010, focuses on financial reform and consumer protection following the 2008 financial crisis. While it addresses systemic risks, it does not directly govern the creation of financial statements to prevent fraud.
5. Evaluate the Gramm-Leach-Bliley Act: This law, enacted in 1999, primarily deals with financial privacy and the sharing of customer information by financial institutions. It is unrelated to financial statement fraud prevention.