This piece of legislation was signed into law on July 30, 2002.  The spirit of the law was to focus on the failure of public accountants to detect fraud during the auditing of corporate books and to detect corporate officers and directors when manipulating financial data to deceive auditors.

The act serves to make a corporation and its officers more responsible for the accuracy of its financial reporting.  The legislation created a new oversight board for accounting firms auditing publicly traded companies.  Every public company in America faces higher standards of behavior in light of Sarbanes-Oxley. 

The Public Company Oversight Board, established under Sarbanes-Oxley, requires auditors to maintain seven years of audit papers.  Relevant documents to be retained include: financial statements and records, either paper or electronic, that may contain information related to or derived from an audit.

These new standards have made a serious impoact on the methods and on the length of time a company must retain its records.  Sarbanes-Oxley addresses the need to clearly define retention and destruction policies for all types of company documents generated in the corporate governance and auditing process.

The Sarbanes-Oxley Act includes stiff penalties for improper company reporting, corporate disclosure and auditing practices including record keeping.  In addition, corporate executives are held personally accountable with CEOs and CFOs certifying the accuracy of financial statements.  Corporations must carefully retain records.  In case they are demanded for government investigation, litigation or audit.  The knowing and willful destruction of key documents is punishable by fines of up to $5 million and prison terms up to 10 years.  Destroying documents to impede a federal investigation and/or altering documents is alswo punishable by prison terms up to 30 years.