Seven Sarbanes Oxley Checklist Components.
Signed into law in July, 2002, The Sarbanes-Oxley Act (SARBOX) is the most sweeping legislation directed toward curbing corporate fraud since the 1930s SEC act.
Compliance to SARBOX is mandatory for ALL publicly-traded corporations as well as public not-for-profit and other charitable organizations. -- Therefore, maintaining a thorough Sarbanes Oxley checklist is of the highest priority for all the above-mentioned entities.
The focus of this article is to provide seven of the most crucial points needing to be addressed on every Sarbanes Oxley checklist.
Maintain Status of Your Section 404 Compliance:
Since Section 404 of SARBOX is where the lion’s share of audits is performed and remains one of the most crucial aspects of the legislation. -- In general, section 404 requires all corporations to publish accurate financial information in their annual reports as well as outline the structure and procedureson how the numbers were derived.
Thus, every Sarbanes Oxley checklist should contain both the procedure and the status of all section 404 documentation procedures.
Have Open Communication with Your D & O Liability Carrier:
Since SARBOX deals primarily with accountability and integrity of corporate financial reporting, every Sarbanes Oxley checklist should have definition clarifying what is, and what is NOT covered by each corporation’s D & O (Directors & Officers) liability insurance.
(D & O insurance is designed to protect corporate directors and officers against personal liability for acts taken during the course of their corporate duties).
Review Status for Your Current Board of Directors:
A review of the organization’s board of directors should be high-priority on any Sarbanes Oxley checklist.-- Having a board with high levels of integrity (thus keeping your company on the high road of compliance) cannot be understated.
A simple review process to gauge the level of congruent thinking among board members is solid business.
Make it S.O.P. to Outsource Your Whistleblower Compliance:
An important piece of the legislation, the whistleblower (AKA internal accountability) is better left to outsourcing since the fines for non-compliance far outweigh the costs of an outsourced whistleblower vendor; thus making it another important piece of your Sarbanes Oxley checklist.
Maintain Regular Follow-Up With Both Outside & Internal Legal Counsel:
This is a common sense Sarbanes Oxley checklist component that should be done once (if not twice), every financial-reporting quarter.
Develop, or Rewrite, Your Corporate Code of Ethics:
(And make sure each employee has a copy)
This goes without much amplification. -- By educating every employee within your organization on the importance of high business ethics and ideals, this portion of your Sarbanes Oxley checklist is self-explanatory.
A random, follow-up quiz over your organization’s code of ethics can be a great way to keep every employee’s level of understanding up to compliance levels.
Implement a Close Relationship between Management & Your Organization’s HR Department:
This piece of your Sarbanes Oxley checklist should be set in order to maintain current and future levels of SARBOX knowledge for all employees, both current and future.
In Conclusion:
By implementing the above strategies on your Sarbanes Oxley checklist, your company or organization will be well on its way of wading through the murky waters of this deeply-confusing, but very necessary legislation.—After all; Sarbanes Oxley is NOT an option!
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