Which Law Protects Stakeholders From Accounting Errors and Fraud?
Short answer
C SOX (Sarbanes-Oxley Act) mandates accurate corporate financial disclosures and internal controls to prevent accounting fraud and protect investors.
Question
Key Takeaways
Tests whether you can map a compliance driver to the right law — the trap is picking ISO/IEC 27001 or PCI-DSS because they are the standards candidates memorize most for 'security controls'.
Information security laws each address a different risk domain, and this question asks which one targets accounting accuracy and fraudulent financial reporting. The page confirms that SOX (Sarbanes-Oxley) is the standard aimed at protecting investors and the public from accounting errors and corporate fraud.
Common mistake: Choosing ISO/IEC 27001:2013 because it sounds like the broadest, most authoritative 'information security standard'; it is a voluntary ISMS framework, not an accounting-fraud statute.
Expert Analysis
Why the Answer Is Correct
SOX (the Sarbanes-Oxley Act of 2002) was passed after the Enron and WorldCom collapses specifically to protect investors and the general public by forcing accurate, reliable corporate financial disclosures. It imposes internal-control and record-keeping obligations on publicly traded companies and makes executives personally accountable for the accuracy of financial statements. That is exactly the wording of the stem — accounting errors and fraudulent activities within organizations — so SOX is the only option that maps to financial-reporting integrity rather than to IT controls or payment-card data. This also matches the CEH blueprint's treatment of SOX as the financial-fraud law in the laws-and-standards module.
Why the Other Options Are Wrong
FISMA is a U.S. federal law aimed at securing government agency information systems, not at accounting accuracy for stakeholders. PCI-DSS is a contractual card-industry standard focused on protecting cardholder data in payment environments, so its scope is payment security rather than financial reporting. ISO/IEC 27001:2013 is a voluntary, certifiable management-system standard for information security; it provides control objectives but has no statutory authority over accounting disclosures or executive accountability. None of these three addresses the investor-protection and anti-fraud purpose described in the question.
Community Comment Notes
Consensus is essentially unanimous: as Binx explains, SOX was "enacted in response to major financial scandals (like Enron and WorldCom) to protect investors" by improving the reliability of corporate disclosures. qwerty100 simply anchors the item to the study material — "C. SOX Module 01 Page 88" — confirming the exam blueprint places this law in the introduction module. nosavotor's request to "double-check this response" is a useful habit, but the reasoning above independently confirms the key rather than deferring to the vote count.
Official Reference
https://www.sec.gov/spotlight/sarbanes-oxley.htm
This link opens the official vendor documentation in a new tab.
Exam Strategy
When a stem uses financial-reporting words such as 'accounting errors', 'fraudulent activities', 'investors' or 'corporate disclosures', map straight to SOX. Reserve FISMA for federal agencies, PCI-DSS for cardholder data and ISO 27001 for voluntary ISMS certification.
Frequently Asked Questions
Why is ISO/IEC 27001:2013 not the answer if it is an information security standard?
Does PCI-DSS protect the general public from accounting errors?
Community Votes
100% of anonymous learners picked answer C. Votes are pick records left by other test-takers — they are not the verified answer.
Discussion 3 contributions
Compiled from public community threads and reader submissions, lightly edited for clarity. Handles and vote tallies are shown as recorded, and comments reflect the views of individual contributors.
From public community threads 3
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Binx 👍 2C. SOX (Sarbanes-Oxley Act) Explanation: SOX (Sarbanes-Oxley Act): The Sarbanes-Oxley Act of 2002, commonly known as SOX, was enacted in response to major financial scandals (like Enron and WorldCom) to protect investors by improving the accuracy and reliability of corporate disclosures. SOX mandates strict reforms to improve financial disclosures from corporations and prevent accounting fraud. It includes provisions related to internal controls, financial reporting, and auditing processes, requiring organizations to implement robust controls to ensure the accuracy of financial information.
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nosavotor 👍 1Hey team can we double-check this response
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qwerty100 👍 2 Answered CC. SOX Module 01 Page 88
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