The act has new requirements to prevent corporate governance scandals occurring again by applying a heavily rules-based nature of legislation including higher levels of reporting to audit committees, audit rotation and restrictions on services that auditors can provide to keep it independent. CEOs and CFOs personally need to certify the quality of the financial statements.

 

PCAOB is a branch of Sarbanes Oxley that all auditors need to register with again to provide another layer of moderation by the SEC. 

 

Overall, the Act has been very controversial, especially in section 404 on internal controls regarding CEOs and CFOs personally needing to certify the quality of financial statements. This holds them personally liable. Another criticism is that small public companies suffer from this section of the act due to increased costs for audit and management- large number of resources required to ensure they meet internal control requirements that do not consider firm size. 

 

The US have created a standard that is not hugely compatible with the rest of the world (as they have done with other aspects of harmonisation too), creating a bit of a halt in the move to global harmonisation. The UK and EU predominantly prefer principle-based standards and the US prefers rules based and these are not interchangeable with one another.