TABLE OF CONTENTS It is appropriate to follow the call for governance by an action plan presented by President George W. Bush and issued on March 7, 2002. The action plan was a "10-Point Plan to Improve Corporate Responsibility and Protect America's Shareholder." Three core principles upon which the action plan was predicated included:
Information accuracy
Information accessibility
Auditor independence
The President's 10-point plan became the foundation for the most extensive reform of business practices in decades. The legislation was called the Sarbanes-Oxley Act of 2002 and was signed into law on July 30, 2002. The act was spearheaded by Paul Sarbanes, a senator from Maryland, and Michael Oxley, a congressman from Ohio. The legislation was passed on July 26, 2002, with a House vote of 423-3 and a Senate vote of 99-0. The act became the launching pad for the Corporate Fraud Task Force and the creation of a new accounting oversight board to police the practices of the accounting profession. It also focused on enhancing the accountability of corporate officers and directors and the quality of financial reporting. The tone for corporate and accounting governance was etched into law, setting a new standard for the future. It provided a foundation for companies to secure a new competitive advantage.
The Sarbanes-Oxley Act of 2002 provides a clear and definitive response to the President's 10-point plan and set in place new accounting oversight rules for corporate America. The 10-point plan spells out the following objectives:
Each investor should have...
