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The enactment of the Sarbanes-Oxley Act in 2002 was meant to reduce corporate financial fraud. This act shields investors from the possible harm that may be caused by corporations through fraudulent activities related to accounting. The act is based on strict guidelines for enhancing financial disclosures which minimize fraud in corporations’ accounting activities. The Sarbanes-Oxley Act has brought many changes both in management and in accounting for corporations. It also revolutionized the internal controls for public corporations. The internal control departments are important players who assist management in public corporations to fulfill their corporate governance potential. One of the major changes in internal controls that came with the enactment of the act was that public corporations were required to hire independent auditors for reviewing their financial and accounting practices. Under the Sarbanes-Oxley Act, the management is mandated with ensuring that the internal financial controls are effective. It is the role of management to invite auditors to assess and report on the possible weaknesses in internal controls. (Kim, 2016).
From both the accounting and management perspectives, the Sarbanes-Oxley act has improved the reliability of financial information produced by internal controls. The effectiveness of internal controls is closely attached to the reliability of the financial information produced. The enactment of the Sarbanes-Oxley act has improved public c…