What is the primary focus of the Sarbanes-Oxley Act?

The primary focus of the Sarbanes-Oxley Act is on enhancing corporate governance and accountability within publicly traded companies. Enacted in response to a wave of corporate scandals in the early 2000s, the act aims to protect investors from fraudulent financial reporting by mandating stricter regulations around the accuracy and reliability of corporate disclosures.

One key aspect of the Sarbanes-Oxley Act is the requirement for top management, including CEOs and CFOs, to personally certify the accuracy of financial statements. This places a significant emphasis on accountability and transparency, reinforcing the need for ethical governance practices. The act also establishes the Public Company Accounting Oversight Board (PCAOB) to oversee the audits of public companies, further bolstering the focus on corporate governance.

In contrast, while financial disclosure is a critical component mandated by the Sarbanes-Oxley Act—ensuring companies provide transparent and truthful financial information—the overarching theme is the governance structure and the responsibilities that corporate leaders hold in safeguarding shareholders' interests. The act does not specifically address tax exemptions for non-profits or medical expenses reporting, thus affirming its primary focus on corporate governance.