Along with the Enron and WorldCom scandals coming to light, investors faced massive losses and lost confidence in financial statements. To protect investors from financial fraud and restore their confidence, the US Congress passed a law in 2002, the Sarbanes-Oxley Act. Thanks to the Sarbanes-Oxley Act, improvements have been made in terms of auditor independence and the accuracy of financial reporting. . The Sarbanes-Oxley Act primarily focuses on fraud prevention in three aspects: corporate governance; improving audit activities and evaluating internal control. Starting with corporate governance, to ensure accurate financial reporting and properly detect internal fraud, the following actions are required by Sarbanes-Oxley: -Restrictions for CEOs and CFOs. Pursuant to Section 302 of the Sarbanes-Oxley Act, CEOs and CFOs must personally make specific certification in financial reporting. The primary responsibility of CEOs and CFOs is to ensure the accuracy of financial information. Any false certification and unethical actions by CEOs and CFOs can expose them to the risk of repayment of ill-gotten gains and criminal penalties. In this case, Scott Sullivan, WorldCom's chief financial officer, transferred normal operating lease expenses to the balance sheet as an asset. Scott failed to ensure the accuracy of the financial statements and violated requirements. Once Cynthia exposed the problem to the audit committee, Scott was indicted by a grand jury in August 2002. In order to avoid the...... middle of paper ......revention, this also leads to a negative reaction. aspects. The main drawback of the law is the issue of accounting and auditing costs. To avoid any conflict of interest, Section 404 requires that an internal control process separate the company's accounting department from its financial division. In addition, this section also requires the company to publish the annual internal control report evaluating the effectiveness of the internal control process and the reports must be reviewed by the external auditors. As a result, more accounting fees are imposed on businesses. Big Four said audit fees would increase 25 to 30 percent to comply with Sarbanes-Oxley. This will lead to higher audit costs, especially for smaller companies, which will have to pay more fees to the Big Four for auditing under the new Sarbanes-Oxley regulations..