When the Enron and MCI scandals broke, it became clear to the US government as well as everyone else that something needed to be done to prevent financial abuses from harming the public. A bipartisan team of legislators led by Senator Paul Sarbanes and Representative Michael G. Oxley put together the Sarbanes Oxley Act, also titled the Public Company Accounting Reform and Investor Protection Act of 2002, and more manageably called SOX for short. It was overwhelmingly passed by the House of Representatives, and the Senate voted unanimously to pass the Sarbanes Oxley bill.
The Sarbanes Oxley Act was signed into federal law on July 30, 2002. Its primary purpose is to protect investors by making corporate information released about accounting and finance more accurate and reliable. It addresses issues like the establishment of a public company, creation of an accounting oversight board, auditor independence, corporate responsibility, and enhanced financial disclosure.
According to President Bush, Sarbanes Oxley includes "the most far-reaching reforms of American business practices since the time of Franklin Delano Roosevelt."
That may be true, but it's also one of the most complex and difficult to understand reforms ever passed. It covers topics such as:
* Personal loans by the company to executive officers or directors * Financial report certification * More timely insider trading reporting * Strong limitations on insider trades * Public reporting of top executive real compensation and company profits * Auditing independence * Personal accountability by the chief officers of the company, backed up by criminal and civil penalties including serious jail time and financial penalties on individuals who misstate financial statements and commit securities violations
You can see how a bill covering so many different topics might be seen as discouragingly complex
Understanding Sarbanes Oxley
There are a few things you can do to learn how Sarbanes Oxley works. First, read reviews and synopses of the Sarbanes Oxley Act on the SEC website; they give an excellent overview of what the law is about. Second, you can get training focused in several different ways on the part of Sarbanes Oxley you need to understand.
The main thing to understand about Sarbanes Oxley, though, is that it primarily affects how you do your accounting, and thus how you run your IT services. Electronic controls must properly manage your financial information, so that you have clear, easy-to-access real-time information on your company's finances. Corporate finances must be kept separate from executive finances, payroll, and other moneys. Auditing for accountability is crucial, so that if errors or misinformation enter the data stream you will be able to determine the source.
With Sarbanes Oxley, even if you were ignorant of what was going on in your accounting, if you are a major executive you will be both civilly and criminally liable for any errors released to the public, or the failure to release certain information in a timely manner. You must learn about Sarbanes Oxley, not just to comply with more government regulations, but to protect your personal life.
|About Author Earl Powers :|
Earl Powers, US Lawyer and SOA expert at Aquest Group LLC ( <a href="http://www.sarbanes-oakley.info" target="_blank">http://www.sarbanes-oakley.info</a> ) publishes other articles related to SOA at <a href="http://www.sarbanes-oxley-software.info" target="_blank">http://www.sarbanes-oxley-software.info</a> and <a href="http://www.sarbanes-oxely.info" target="_blank">http://www.sarbanes-oxely.info</a>
Article Source: https://www.bharatbhasha.com
Article Url: https://www.bharatbhasha.com/legal.php/36039
Article Added on Thursday, January 19, 2006
|Other Articles by Earl Powers|
Sarbanes Oxley Training
The Sarbanes Oxley Act is incredibly complex and affects several different parts of your corporation in different ways. In order to comply properly with it, you will probably need specific targeted training for what your CEO and CFO need to know about the Sarbanes Oxley training; what your IT department will need to do; what your Board of Directors should be reviewing; and how to oversee Sarbanes Oxley training in its entirety in your business.
That's a lot of Sarbanes Oxley training. Small...
Sarbanes Oxley Section 404 Or Was That Page Not Found 404
Sarbanes Oxley 404 refers to the section 404 of the Sarbanes Oxley act according to which it entitles to have stricter internal controls while documenting the financial status of the company. Most of the senior executive in the top corporate world emphasize on compliance with Sarbanes Oxley 404 section.
Sarbanes Oxley 404 is directed towards management, members of corporate teams working toward assessment of internal controls over financial reporting and audit committee members. It resolves...
What Comes After Sarbanes Oxley
The Sarbanes Oxley Act was passed in 2002 to curb accounting abuses that led to the bankruptcy and financial ruin of several major companies, and the loss of billions of dollars to investors who have every right to expect their money to be safe. The Sarbanes Oxley Act is a major auditing nightmare for most companies, though no one is questioning its necessity.
When it was first implemented in 2002, almost every company's finance and accounting related projects were delayed. Why? Tons of new...
Sarbanes Oxley Compliance Will Tighter Controls Work
Sarbanes Oxley act had been levied for tighter controls and stricter regulations for company’s internal controls. According to the Sarbanes Oxley compliance companies with market capitalization of more than $75 million need to file their financial reports by the June 15th. This date was alter amended up to 15th November. All other companies need to files their financial return for any fiscal year by 15th July.
Sarbanes Oxley compliance with section 302 requires any CEO or CFO to certify the...
Sarbanes Oxley Act Sox And Not The Ones On Your Feet
Sarbanes Oxley Act falls under 'Corporate and Auditing Accountability, Responsibility, and Transparency Act' or 'CAARTA' act which was passed by the US Senate Banking Committee with the support of President Bush. This act was passed to strengthen corporate governance and improve investor confidence. Sarbanes Oxley Act ensured the accuracy and reliability of disclosures from the corporate world. This came into force to avoid any financial scandals from corporate giants.
Sarbanes Oxley Act is...