Sarbanes Oxley Compliance Basics: A New Level Of Corporate Accountability
Introduction:
The passing of the Sarbanes Oxley Act of 2002 (SARBOX) was the clarion call to public corporations and organizations toward a higher bar of financial responsibility and reporting. Preparing for, and implementing, the protocols necessary for proper Sarbox Compliance requires new levels of internal corporate controls and technology.
When initially passed, few anticipated the impact the SARBOX act would have on their technological needs as a business. Many corporate IT professionals are now realizing the complexity of the requirements and what they mean for the bottom line of the business. In short, streamlining and effectualizing the process means lesser strain on profits.
Sarbox Compliance is not an option: In the wake of the corporate scandals that rocked the public business world in the late 1990s, political executives, national legislators, business leaders, business customers and investors alike welcomed the passing of the Sarbanes Oxley Act. The latter two groups needed the trust (which had been blatantly evaporated due to the scandals) to return. The intentionality and scope of the fraud was overwhelming. But now, public corporate CEOs, CFOs, and other responsible parties are being held to the fire. Integral fiscal accountability is back in corporate America; and this time, it’s law! The basics of SARBOX Compliance: The three most common sections of the Sarbanes Oxley Act requiring diligent attention toward compliance are Sections 302, 409, and 404.
Section 302 states that companies must guarantee the accuracy of all financial reports. Section 409 requires companies to put investors on notice when financial situations change. And Section 404, the most recent addition, requires companies to prepare reports evaluating their company's internal executives at meeting these guidelines.
Each of these sections requires the complying companies and organizations to devote valuable time and resources to satisfy requirements.
If they haven’t done so already, the majority of companies, in order to meet the strict Sarbox Compliance guidelines, will need to invest in new technology and compliance programs.
The goal of this technology (consisting of specific software programs and other learning management systems) will be to successfully timeline all SARBOX-related activities, ensuring and well documenting all financial-related actions, and maintaining an accountability log for each of the above-mentioned activities.
By having these measures in play, any discrepancy in the system can be easily tracked and assigned culpability.
Systems and software programs designed to help companies meet the strict mandates of Sarbox compliance guidelines are growing increasingly effective and helpful in navigating the difficult waters of The Sarbanes-Oxley Act. .
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