Background to legislation and requirements
The Sarbanes-Oxley Act (SOX) was signed into law on 30th July 2002, and introduced highly significant legislative changes to financial practice and corporate governance regulation for companies with publicly traded securities in the United States. It introduced stringent new rules with the stated objective: "to protect investors by improving the accuracy and reliability of corporate disclosures made pursuant to the securities laws".
It also introduced a number of deadlines, the prime ones being:
The Sarbanes-Oxley Act itself is organized into eleven titles, although sections 302, 401, 404, 409, 802 and 906 are the most significant with respect to compliance and internal control. (Sarbanes Oxley section 404 seems to cause most concern). In addition, the Act also created a public company accounting board.
Perhaps one of the most remarkable aspects of this legislation however relates to its profile. It is very much in the public and media arena. The focus is certainly intense in this respect, creating yet another clear motivation for compliance. There is simply no escaping it!
Every company listed on the New York Stock Exchange (NYSE) is required to comply with the rules of the Securities and Exchange Commission (SEC) in the United States of America. One of the requirements is compliance with SOX, Section 404, which is to be achieved by fiscal year end 2005.
This means that:
Every company's financial reporting has to include:
How Can Stand'Art & Management Help?
Either SOX is rather new to you or not, our consultants can help you and your staff getting familiar with and better understand the requirements of the SOX / COSO framework. The new COSO framework consists of eight components:
The Sarbanes-Oxley Act (SOX) was signed into law on 30th July 2002, and introduced highly significant legislative changes to financial practice and corporate governance regulation for companies with publicly traded securities in the United States. It introduced stringent new rules with the stated objective: "to protect investors by improving the accuracy and reliability of corporate disclosures made pursuant to the securities laws".
It also introduced a number of deadlines, the prime ones being:
- Most public companies must meet the financial reporting and certification mandates for any end of year financial statements filed after November 15th 2004 (amended from June 15th).
- Smaller companies and foreign companies must meet these mandates for any statements filed after 15th July 2005 (amended from April 15th).
The act is actually named after its main architects, Senator Paul Sarbanes and Representative Michael Oxley, and of course followed a series of very high profile scandals, such as Enron and Worldcom. It is also intended to "deter and punish corporate and accounting fraud and corruption, ensure justice for wrongdoers, and protect the interests of workers and shareholders" (Quote: President George W. Bush).
The Sarbanes-Oxley Act itself is organized into eleven titles, although sections 302, 401, 404, 409, 802 and 906 are the most significant with respect to compliance and internal control. (Sarbanes Oxley section 404 seems to cause most concern). In addition, the Act also created a public company accounting board.
Perhaps one of the most remarkable aspects of this legislation however relates to its profile. It is very much in the public and media arena. The focus is certainly intense in this respect, creating yet another clear motivation for compliance. There is simply no escaping it!
Companies' need to comply
Every company listed on the New York Stock Exchange (NYSE) is required to comply with the rules of the Securities and Exchange Commission (SEC) in the United States of America. One of the requirements is compliance with SOX, Section 404, which is to be achieved by fiscal year end 2005.
This means that:
Every company's financial reporting has to include:
- A statement of management’s responsibility for establishing and maintaining adequate internal control over financial reporting for the Company,
- A statement identifying the framework used by management to evaluate the effectiveness of this internal control,
- Management’s assessment of the effectiveness of this internal control as of the end of the most recent fiscal year; and
- A statement that the Company's auditor has issued an attestation report on management’s assessment
How Can Stand'Art & Management Help?
Either SOX is rather new to you or not, our consultants can help you and your staff getting familiar with and better understand the requirements of the SOX / COSO framework. The new COSO framework consists of eight components:
- Internal control environment
- Objective setting
- Event identification
- Risk assessment
- Risk response
- Control activities
- Information and communication
- Monitoring.
