H.R. 3763, commonly cited as the "Sarbanes-Oxley Act of 2002", was enacted by the One Hundred Seventh Congress in response to the Enron and Worldcom scandals occuring in 2001. It was enacted on January 23, 2002.
The Sarbanes-Oxley Act, sponsored by Michael Oxley (R-OH) and Paul Sarbanes (D-MD), provided for the formation of the Public Company Accounting Oversight Board (PCAOB), requires that a publicly traded company's management attests to the validity of the financial reporting to the SEC, and requires that management perform an annual assessment of a company's internal controls. It also makes falsification of accounting records a crime with the potential for both fines and prison time up to 20 years.
The intent of this act was to prevent another Enron scandal by ensuring that management was aware of the company's internal controls and required that they personally attest to the accounting statement so that they could not claim ignorance when finances were not as they should be. However, many auditing firms (especially the Big Five) have interpreted this as a license to print money. They now perform additional audits, charging hundreds of dollars an hour to have so-called auditors who are often just out of college go down a checklist.
The Sarbanes-Oxley scare has caused many companies to become far more aware of network security, trying to close up holes in their systems that could result in unauthorized changes to critical financial systems. In part, the Act has been beneficial, requiring companies to do things they should have been doing anyway. However, it has also generated an amazing amount of unnecessary bureaucracy, especially for smaller corporations where the culture is far different, and the controls, where largely undocumented, are nonetheless effective.