In July 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.
Sarbanes Oxley compliance 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 Sarbanes-Oxley 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.
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 are Sarbanes Oxley compliant. 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; and
- submit a document attesting to the effectiveness of the company’s internal controls over financial reporting.
The challenge faced
Adherence to Sarbanes Oxley compliance rules through the 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 Sarbanes Oxley compliance 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 requirements, we are able to offer guidance and advice on Sarbanes Oxley compliance; whether that be in a purely consultative capacity or in providing professional help at every step of the way.
The next step
If you would like to discuss the Sarbanes Oxley compliance services we can provide for your business in more detail, please contact one of our Sarbanes Oxley specialists, or complete the contact form.