The Sarbanes-Oxley Act of 2002 is a governmental response to:

• A. The introduction of the euro currency
• B. The financial crisis of 2008
• C. The implementation of international accounting standards
• D. Major corporate accounting scandals such as Enron and WorldCom

Answer: (D)

Verified step by step guidance

1. Understand the context of the Sarbanes-Oxley Act of 2002: It was enacted in response to major corporate accounting scandals, such as Enron and WorldCom, which revealed significant issues in financial reporting and corporate governance.
2. Recognize the purpose of the Act: The Sarbanes-Oxley Act was designed to improve the accuracy and reliability of corporate disclosures and protect investors from fraudulent accounting practices.
3. Learn about key provisions of the Act: It introduced stricter regulations for financial reporting, internal controls, and auditor independence. For example, Section 404 requires companies to establish and report on internal controls over financial reporting.
4. Understand the role of the Public Company Accounting Oversight Board (PCAOB): The Act established the PCAOB to oversee the audits of public companies and ensure compliance with auditing standards.
5. Connect the Act to its broader impact: The Sarbanes-Oxley Act has had a lasting effect on corporate governance, financial transparency, and the responsibilities of executives and auditors in maintaining ethical practices.