Budgeting

Budgeting

The Sarbanes-Oxley Act of 2002 is also known as the Public Company Accounting Reform and Investor Protection Act of 2002 and it is commonly called as Sox or SarbOx . This Act of 2002 is a United States federal Law which was passed in response to a number of major corporate and accounting scandals which includes those affecting Enron , Tyco International and WorldCom . These scandals resulted in a decline of public trust in accounting and reporting practices in business . The sponsors of this act were Senator Sarbanes , Paul and a Representative

Oxley , Michael G . in which also the Act was named after them . It was approved by the House and by the Senate . Legislation is wide ranging and establishing enhanced standards for all U .S public companies , management and Public accounting firms

This act contains sections ranging from additional Corporate Board responsibilities to criminal penalties and thus requiring the Securities and Exchange Commission to implement the rulings on requirements to comply with the new law . It is believe that the legislation is necessary and useful , while others does not believe on it but rather believes that it does more damage economically than it prevents . Yet others observe how essentially modest the Act is being compared to the heavy meaning or responsibility accompanying it

The Public Company Accounting Oversight Board is the first and most important part of the Act which establishes a new quasi-public agency This Board is charged in overseeing , inspecting , regulating and disciplining accounting firms in their role as auditors of public companies . Part of the Act is to cover issues such as auditor independence , corporate governance and enhanced financial disclosure This act has been considered as one of the most significant changes to United States securities and laws . This act has introduced a number of financial reporting and certification mandates for any end year financial statements d after November 15th of 2004 , smaller companies and foreign companies must meet these mandates for any statements d after the 15th of July 2005

The major provisions of this acts are the following Creation of the Public Company Accounting Oversight Board , a requirement that public companies evaluate and disclose the effectiveness of their internal controls as they relate to financial reporting , and that independent auditors for such companies agree , or qualify to such disclosure certification of Financial reports by chief executive officers and chief financial officers , auditor independence , including outright bans on certain types of work for audit clients and pre-certification by the company 's audit committee of all other non-audit work , a requirement that companies listed on stock exchanges have fully independent audit committees that oversee the relationship between the company and its auditor , ban on most personal loans to any executive officer or director , accelerated reporting of trades by insiders , prohibition on insider trades during pension fund blackout periods , additional disclosure , enhanced criminal and civil penalties for violations of securities law , significantly longer maximum jail sentences and larger fines for corporate executives who knowingly and willfully misstate financial statements , although maximum sentences are largely irrelevant because judges generally follow the Federal Sentencing Guidelines in setting actual sentences , employee protections allowing those corporate fraud whistleblowers who complaints with OSHAwithin 90 days to win reinstatement , back pay and benefits , compensatory damages , abatement s , and reasonable attorney fees and costs (See Sarbanes-Oxley Act . Wikipedia the Free Encyclopedia . The Sarbanes-Oxley Act is also intended to punish corporate and accounting deception and corruption ensure justice for wrongdoers , and protect the interests of workers and shareholders . Auditing has become more of a regulated industry after the enactment of the Sarbanes-Oxley Act of 2002 (Sarbanes . Organizations have greater financial reporting and control responsibilities , and stakeholders expect auditors to hold their audit clients to a higher standard of accountability for financial reporting and compliance controls as well as operating and financial reporting transparency . So on July 30 , 2002 , president bush signed into a law which is the aforementioned act . Which he characterized as the most far reaching reforms of American Business practices since the time of Franklin Delano Roosevelt

This Act mandated a number of reforms to enhance corporate responsibility , enhance financial disclosure and combat corporate and accounting fraud or deception , and with that created the Public Company Accounting Oversight Board also known as the PCAOB , to oversee the activities of the auditing profession . In this act it is not only the finances of the firm that is being protected but also the auditor 's welfare . These are the PCAOB requirements for auditor attestation of control disclosures : Enough information about the flow of transactions to identify where material misstatements due to error or fraud could occur , controls designed to prevent or detect fraud , including who performs the controls and the regulated segregation of duties , controls over the period-end financial reporting process , controls over safeguarding of assets , the results of management 's testing and evaluation

References

Sarbanes- Oxley Act . Wikipedia , the Free Encyclopedia . HYPERLINK "http /en .wikipedia .org /wiki /Sarbanes-Oxley_Act Cost_of_implementation http /en .wikipedia .org /wiki /Sarbanes-Oxley_Act Cost_of_implementation

The Sarbanes- Oxley Act Community Forum . HYPERLINK "http /www .sarbanes-oxley-forum .com /index .php http /www .sarbanes-oxley-forum .com /index .php ...