Sarbanes-Oxley is more a set of guidelines versus a set of rules; it's ultimately an act that mandates financial accountability. The original intent is about accountability of executives but has morphed into something else within many enterprises. Transparency of, and accuracy in, financial reporting is what it's all about.
Sarbanes-Oxley is every bit as pervasive as Y2K, the only difference there is no end. It is designed to increase corporate transparency and reduce the time between a material loss event, and when the event is reported. It is working.
Named after Senator Paul Sarbanes, and Representative Michael Oxley, SOX is America's response to Enron and other scandals. Corporate America is currently facing major government-mandated change as a result of the Act.
This is nothing new, all that is in there has been in securities law before. But this act is forcing public companies to re-examine their internal control and financial systems.
Do you have the right controls in place to support the initiatives? All public companies are responsible for ensuring their own compliance with the SOA.
Companies are now investing heavily in new software to help them with compliance.
It was designed to changing forever the financial reporting landscape for finance professionals. It's considered to be one of the most significant changes to federal securities law.
No law in recent memory has caused more confusion and apprehension in corporate America than the SOA. It came in the wake of a series of corporate financial scandals, including those affecting Enron, Arthur Andersen, and WorldCom. A law like this cannot help but have an influence over the business world that exceeds the actual language of the provisions.
Part of industries concern about SOX is simply a knee-jerk reaction to new rules, regulations and responsibilities of any sort. And as you have heard, compliance is difficult, complex, and time-consuming.
Its purpose is to lay down the law in financial reporting. it is a challenge, but it's the law of the land.
Gene writes for CNS, you can see his articles from the home page at
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you can find his articles at
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