Features About Sarbanes Oxley Impact
Also known as SOX, the Sarbanes-Oxley Act was formulated mainly to provide clear guidelines in the working of corporate accounting and financial concerns. The act was formulated after the debacles of multi million firms such as MCI and Enron. It was executed in 2002 and since then has become a concern for the Information Technology industry. Sarbanes oxley impact has been felt across the IT industry. It was framed by the authorities of United States.
In addition to SOX, the act is also referred as Public Company Accounting Reform and Investor Protection Act of 2002. The formulation of the law became important as public started losing faith in the public limited companies. The act was named after Senator Paul Sarbanes and Representative Michael G. Oxley. Sarbanes Oxley impact act was passed by a majority vote of 423 against 3. It was finally passed by the president of united states George W. Bush. It was considered to be a very important law for the fair conduct and transaction of public companies.
The Sarbanes Oxley impact act establishes new benchmarks for the management, company boards and all accounting firms. The SOX act contains 11 sections. The rulings of the act are implemented by Securities and Exchange Commission or SEC. the Sarbanes Oxley impact has been that it safeguards the economic interest of the shareholders. As a result companies are able to enjoy a great deal of investment and give their shareholders a great deal of dividend.
The Public Company Accounting Oversight Board oversees, inspects, regulates and controls the auditors of the public companies. Other issues that are covered by the act include independence of auditor, internal control evaluation The Act also covers issues such as auditor independence, corporate governance, internal control evaluation, and enhanced financial disclosure. The act improves the integrity and reliability of the reports of a company. The act as a security measure is important as some of the American companies have gone bankrupt due to the loopholes in their computer security system. Considering the loss caused the SOX act has become a necessity. Not only does The Sarbanes Oxley Act supervise public companies of United States but also other companies that trade on the stock exchange of the country. Enron has been the main reason behind the framing of the act. The act aims to protect companies against computer crime and computer security. Various sections of the act provide guidelines on the protection of the government. For instance section 409 makes it compulsory for a company to report any changes in its working to the governing body. In case of certification regarding the authenticity of the report, Section 302 is applicable. Section 404 states the guidelines for the authenticity of the reports. As per section 802 it is necessary for a company to maintain accounting work papers and documents. The Sarbanes oxley impact has been that companies can safely and securely conduct their business. This makes it possible for a company to work efficiently making a great deal of money. Not only a company but shareholders also make money.
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