In response to the accounting failures, Congress passed
the Sarbanes–Oxley Act of 2002 (SOX) to address financial
reporting concerns arising from management, boards of
directors, internal and external auditors, and accounting
standard-setters. One issue raised was the current orientation
of accounting standards and their potential roles in
the recent accounting failures. SOX required the Securities
and Exchange Commission (SEC) to conduct a study of
‘‘principles-based” standards to address the purported