Sarbanes Oxley (SOx)
The growth of digital technology has raised issues of data security and financial conduct to an unprecedented level. The ease of data collection, storage and transfer has the potential to expose otherwise straightforward transactions to a bewildering range of errors, omissions and malicious actions. Systems of regulation and compliance abound, some of them industry-led, otherwise imposed by legislatures. The Sarbanes-Oxley Act (SOx) was passed by the US Congress way back in 2002 with the express intention of addressing some of the key issues that arose from financial scandals such as those which engulfed Enron and WorldCom. Its aim was to give protection both to shareholders and to the general public against errors in accounting and fraudulent activities.
When the Act came into force, the mass application of digital technology was still in its infancy compared to the sophistication of today, but it was already clear that the scale of possible improprieties was too great to be dealt with by anything other than this far-reaching provision which applies not only to all public companies in the US but also to wholly-owned subsidiaries and foreign companies which are traded publicly in the US and do business there. The extent of its power includes the regulation of the accountancy practices which audit qualifying companies. The goal of the congressman who drafted the act and for whom it is named was nothing less than a complete overhaul of corporate accountability and governance which is what Sarbanes Oxley compliance represents.
Key requirements of SOx compliance
Getting help and advice on SOx compliance
Also known as the Public Company Accounting Reform and Investor Protection Act, SOx makes it much harder for companies to keep inconvenient debts off their balance sheets and away from the scrutiny of auditors. It also tackles the fraudulent practices of under-reporting costs by capitalising them rather than recording them as expenses and over-stating revenues by making fake entries in company accounts. Although the act was greeted with some criticism because it imposed the new regime universally, even on those companies which had been paragons of accounting virtue, it came to be accepted as a necessary burden to promote customer and investor confidence.
Sarbanes Oxley compliance is unavoidable for any company that has a presence of any kind in the United States. The act’s provisions fall into 11 categories of which those dealing with corporate responsibility for financial reports, internal controls, disclosures and criminal alteration of documents have the most profound effect and can carry penalties including huge fines and lengthy custodial sentences. However, every requirement must be met. Gradeon’s experience of regulatory regimes, both national and international, has given us the expertise and detailed knowledge to advise on all aspects of SOx compliance, so if your company is subject to the act or you even suspect that it might be, then you should contact us to see how we can help your business to continue trading safely and legally in the international market.