Sarbanes Oxley compliance
The Sarbanes-Oxley Act 2002
In July of 2002 the Sarbanes-Oxley Act was passed, and made law, in response to the collapse of Enron and a series of other corporate scandals in the US. The Act was introduced with the hope of reassuring investors and restoring their confidence through significant changes to the regulation of the auditing profession in the US. Section 404 of the Act requires the production of annual management reports and auditor attestation on the effectiveness of internal controls and procedures in respect of financial reporting for US companies registered on the Securities and Exchange Commission (SEC) and for their global subsidiaries.
"Sarbanes-Oxley is not about checking boxes. It is about accountability. If you audit a financial statement, if you are the CEO of a publicly traded company, indeed, if you have any role in the capital markets, you must be accountable for your actions."
William McDonough, chairman of the Public Company Accounting Oversight Board (PCAOB)
How it affects you?
In order for an auditor to successfully undertake an audit of your company's internal controls over its financial reporting, your management teams must ensure they comply with the following, they must;
- take full responsibility for the effectiveness of the company's internal controls over financial reporting;
- evaluate the effectiveness of the company's internal controls over financial reporting;
- provide supporting evidence of the aforementioned evaluation;
- submit a document attesting to the effectiveness of the company's internal controls over financial reporting.
The challenge faced
Adherence to, and implementation of, the Sarbanes-Oxley Act, in particular Section 404, is one of the most significant challenges facing many companies today. Whilst many are increasingly committed to ensuring that they comply with the regulations, this is often considered against a backdrop of cost cutting. Many management teams are simply not fully aware of the real risks to themselves or their auditors.
As a result of the enormity of the task, many companies are struggling to find the manpower and the experience to conduct the project without professional support. To help you and your company to successfully address these new requirements, we are able to offer guidance and advice; whether that be in a purely consultative capacity or in providing professional help at every step of the way.
Click here to read about our Sarbanes Oxley compliance service offering to you
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