What does SOX require from outside auditors in relation to corporate financial statements?

The Sarbanes-Oxley Act (commonly referred to as SOX), enacted in response to financial scandals (such as Enron and WorldCom), established stricter regulations for corporate governance and accountability, significantly affecting the role of outside auditors. One of the critical requirements of SOX is to enhance the independence of auditors. This means that auditors must be free from any relationships that could impair their objectivity and impartiality when conducting audits of financial statements.

Increased independence is vital because it ensures that auditors can provide an unbiased evaluation of a company's financial reporting. This includes restrictions on the types of non-audit services that auditors can provide to their audit clients, thereby minimizing conflicts of interest. By requiring this independence, SOX aims to restore public confidence in the accuracy and integrity of financial statements, which is essential for proper functioning of the financial markets.

Other options do not align with the central tenets of SOX. For instance, while some might argue for more frequent audits, SOX specifically focuses on the independence and quality of existing audits rather than increasing their frequency. Similarly, there is no emphasis in SOX on lowering fees for services, and reducing oversight from boards contradicts the act's intent of enhancing corporate governance and accountability. Therefore,