The act enacted in 2002 to strengthen corporate governance and financial reporting is known as:

• A. The Sherman Antitrust Act
• B. The Federal Securities Act
• C. The Securities Exchange Act
• D. The Sarbanes-Oxley Act

Answer: (D)

The main idea is understanding which 2002 legislation overhauled how publicly traded companies are governed and how they report finances. The act introduced strict governance and reporting standards, creates a strong framework for internal controls, and increases accountability for executives and auditors. It requires top managers to personally certify the accuracy of financial statements, mandates an assessment of internal controls over financial reporting, and establishes the oversight body for auditors. These changes collectively raise accountability, transparency, and reliability in financial reporting, addressing the governance gaps exposed by early-2000s corporate scandals. The other laws listed are older regulations focused on different aspects of governance or securities regulation, not the 2002 reform aimed at corporate governance and financial reporting.