Which of the following practices is recommended for compliance with the Sarbanes-Oxley Act?

Establishing an audit committee is a crucial practice recommended for compliance with the Sarbanes-Oxley Act. This legislation was enacted to enhance corporate governance and accountability, particularly in publicly traded companies. One of its key provisions requires publicly held companies to form independent audit committees that are responsible for overseeing financial reporting, audits, and compliance with regulations. The audit committee plays a pivotal role in ensuring accurate financial disclosures, mitigating fraud risks, and overseeing the relationship with the external auditors.

By implementing an audit committee, companies can foster transparency and build trust with investors and stakeholders, which are fundamental goals of the Sarbanes-Oxley Act. This independent oversight is essential for effective risk management and ensuring compliance with the stringent financial regulations outlined in the Act.