Which act affects publicly traded U.S. corporations by requiring certain accounting methods and financial reporting?

Which act affects publicly traded U.S. corporations by requiring certain accounting methods and financial reporting?

• A. Health Care and Education Reconciliation Act of 2010
• B. Sarbanes-Oxley (SOX)
• C. Gramm-Leach-Bliley Act (GLBA)
• D. Family Educational Rights and Privacy Act (FERPA)

Answer: (A)

This question tests your knowledge of which law governs accounting practices for publicly traded U.S. companies. The Sarbanes-Oxley Act, enacted in 2002, is the rule that imposes strict requirements on financial reporting and internal controls for public companies. It pushes management to personally certify the accuracy of financial statements, establishes stronger internal control over financial reporting, and creates the Public Company Accounting Oversight Board to oversee audits. These measures are specifically designed to improve transparency and accountability in corporate financial reporting. The other acts don’t fit this description: the Health Care and Education Reconciliation Act focuses on healthcare policy changes; the Gramm-Leach-Bliley Act addresses the protection of consumer financial information and privacy; and the Family Educational Rights and Privacy Act protects the privacy of student education records.

This question tests your knowledge of which law governs accounting practices for publicly traded U.S. companies. The Sarbanes-Oxley Act, enacted in 2002, is the rule that imposes strict requirements on financial reporting and internal controls for public companies. It pushes management to personally certify the accuracy of financial statements, establishes stronger internal control over financial reporting, and creates the Public Company Accounting Oversight Board to oversee audits. These measures are specifically designed to improve transparency and accountability in corporate financial reporting.

The other acts don’t fit this description: the Health Care and Education Reconciliation Act focuses on healthcare policy changes; the Gramm-Leach-Bliley Act addresses the protection of consumer financial information and privacy; and the Family Educational Rights and Privacy Act protects the privacy of student education records.