Sarbanes-Oxley Act of 2002
This legislation acquired its name after Senator Paul Sarbanes and Representative Michael Oxley. They were the two main architects to bring this law into existence. This legislation came to into realization in 2002 it brought major changes to financial regulations and corporate governance. The Sarbanes-Oxley Act (SOX) is organized into eleven titles. The purpose of this literature is to describe the main aspects of the regulatory environment that will protect the public from fraud within corporations. To ensure honesty and ethical conduct, the Security Exchange Commission adopted rules that require a company to disclose yearly whether the company has adopted a code of ethics for the company’s top executives and senior financial officers. This literature will also discuss financial fraud and the prevention of financial fraud.

Regulatory environment consist of several laws and regulations that has been developed by federal, state, and local governments in order to limit control over business practices. The regulatory environment plays an important role in the positive operation of the financial sector and in the efficient management and integration of capital flow and domestic savings. “The value of the claims of financial institutions on borrowers is dependent upon the certainty of legal rights, coupled with the predictability and speed of their fair and impartial enforcement. Legal and regulatory frameworks that empower the regulator and govern the conduct of market participants form the cornerstone of the orderly operation and development of the financial sector” (Making Finance Work for Africa, 2012). Regulatory compliance has always been a part of doing business. In almost all industries there are a variety of governments and industry regulations that the company must follow in the way that they conduct their business and the penalties of not following the regulations are clearly defined within the company.

There are many...