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Sarbanes Oxley

Paul Sarbanes & Michael Oxley - architects of the lawSarbanes Oxley Compliance

Genuine compliance to Sarbanes-Oxley legislation is not only a legal requirement but essential!

What is the Sarbanes-Oxley Act ?
What does Sarbanes-Oxley Address?
Section 404: Management Assessment Of Internal Controls

Quality of SOX documentation and Procedures



What is the Sarbanes-Oxley Act ?

  • Sarbanes-Oxley (SOX) is a US law passed in 2002 to strengthen Corporate governance and restore investor confidence. Act was sponsored by US Senator Paul Sarbanes and US Representative Michael Oxley.
  • Sarbanes-Oxley law passed in response to a number of major corporate and accounting scandals involving prominent companies in the United States. These scandals resulted in a loss of public trust in accounting and reporting practices.
  • Legislation is wide ranging and establishes new or enhanced standards for all US public company Boards, Management, and public accounting firms.
  • Sarbanes-Oxley  law contains 11 titles, or sections, ranging from additional Corporate Board responsibilities to criminal penalties. Requires Security and Exchange Commission (SEC) to implement rulings on requirements to comply with the new law.
  • The law applies to companies registered on the New York Stock Exchange or NASDAQ having over US$ 75 million or with more than 300 shareholders and their subsidiary companies elsewhere in the world.

What does Sarbanes-Oxley Address?

  • Establishes new standards for Corporate Boards and Audit Committees
  • Establishes new accountability standards and criminal penalties for Corporate Management
  • Establishes new independence standards for External Auditors
  • Establishes a Public Company Accounting Oversight Board (PCAOB) under the Security and Exchange Commission (SEC) to oversee public accounting firms and issue accounting standards

Section 404: Management Assessment Of Internal Controls.

Requires each annual report of an issuer to contain an "internal control report", which shall:

  1. State the responsibility of management for establishing and maintaining an adequate internal control structure and procedures for financial reporting; and
  2. Contain an assessment, as of the end of the issuer's fiscal year, of the effectiveness of the internal control structure and procedures of the issuer for financial reporting.

Each issuer's auditor shall attest to, and report on, the assessment made by the management of the issuer. An attestation made under this section shall be in accordance with standards for attestation engagements issued or adopted by the Board. An attestation engagement shall not be the subject of a separate engagement.

The language in the report of the Committee which accompanies the bill to explain the legislative intent states, "--- the Committee does not intend that the auditor's evaluation be the subject of a separate engagement or the basis for increased charges or fees."

Directs the SEC to require each issuer to disclose whether it has adopted a code of ethics for its senior financial officers and the contents of that code.

Directs the SEC to revise its regulations concerning prompt disclosure on Form 8-K to require immediate disclosure "of any change in, or waiver of," an issuer's code of ethics.


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