Sox go is a great need for the US corporate entity. Sox, or Sarbanes-Oxley Act is a piece of legislation that aims to protect the interests of investors and manage governance. It seeks to make American companies such as public audit firms and management and public company boards accountable by setting new, higher standards for their conduct.
SOX Act was enacted in the background corporate frauds that rocked America in the 1990s and early 2000s, namely Enron, WorldCom, Tyco, Adelphia, Peregrine and other smaller ones. After this scandal, it was thought that the accounting firm “needs to tighten and make more accountable. Eponymous law is the creation of Senator Paul Sarbanes and Representative Michael Oxley. The essence of the Sox is to verify the authenticity and veracity of company accounts. Since it brings responsibility at the core of the financial system and corporate systems; This Act is termed as the most far reaching reform for the US business environment from the New Deal introduced by Franklin Roosevelt in the wake of the Great Depression era.
What does it mean to be a Sox go?
After the passage of this Act, companies need to follow the new, more stringent rules set out in it. American and other nations “to do business in America are bound comprehensive and complex set of laws and regulations. Accounting of them are under much greater scrutiny than they were in the past. For a company to be in SOX compliance, they need to practice transparency their finances
Some of the tools that SOX compliance is ensured :.
The outstanding features of the Sox are set out in 11 titles. These titles related to comprehensive compliance and control all aspects of governance. These are:
Title 1: Public Company Accounting Oversight Board (PCAOB)
Title 2: Auditor Independence
Title 3: Responsibility
Title 4: Enhanced Financial Disclosures
Title 5: Analyst Conflicts of Interest
Title 6: Commission Resources and Authority
Title 7: Research and reports
Title 8: Corporate and Criminal Fraud responsibility
Title 9: White Collar Crime Penalty Enhancement
Title 10: Corporate tax returns
Title 11: Corporate Fraud responsibility
How does the law give
SOX compliance is enforced through the Securities and Exchange Commission (SEC). This body publishes rules on claim of compliance. It also sets a deadline for the implementation of the relevant areas Sox go.
Sox and electronic data
The tendency these days is for the electronic records; Sox Act provides requirements for the preservation of electronic data. It has three sections that deal specifically with how the electronic data must be managed. The first of these is set out in Sec. 802 (a). It concerns itself with the destruction, falsification or alteration of data, which provides fines and imprisonment for up to 20 years or both.
Sec. 802 (a) (1) sets out the rules for the preservation of electronic data. The auditors who audit firm shall keep records for up to five years from the end of the fiscal period in which the audit was conducted. This is a great demand for SOX compliance.
Sec. 802 (a) (2) defines the type of documents that must be preserved, and to the kind of scrutiny that they can take to public authorities accounting.