Does Your Business Understand The Sarbanes Oxley Act?
Whether you are a US company, or just a company with links back to the US, you may be required to know about the Sarbanes Oxley act. If you are an American company and haven’t heard of it before, then you have already learnt something about it. It’s a United States law.
Sarbanes Oxley is an act that was signed into the US law in 2002. The act was designed to try and stop companies doing what Enron and Worldcom did. Both of these companies were found to have been working using fraud deals for a number of years. In that year, it wasn’t required for any companies to present their finance records.
What the act does is it makes sure that companies are run legitinately and if it’s found that they are not, it holds the big guns responsible.
The act means that CEO’s and CFO’s are required to sign the books for the company. They are required to sign the records to say they don’t contain anything that’s false and that they match the companies earnings.
If the act is not abided by or the records are found to be false, the Chief Officers can be punished by the government.
Like I said at the top, you might not be required to follow the act. Only companyies within the US, UK or Europe and have listings in the US stock exchange are required to follow the act. You would also have to abide by the act if the company is based in the UK or Europe by it’s a subsidiary of an US company.
Some companies find the Sarbanes Oxley act to be a real pain. Because companies are required to release all their transactions, even the sale and purchase of new assets. This is where people have the problem because all the company’s fixed assets must before recorded.
The process of fixed asset accounting can be expensive and take time. If you do it yourself within the company it can take several months and can often result in errors. The easiest way to ensure you have recorded all your assets is by outsourcing the process to an asset management company.
Unfortunately, it’s definately not a cheap act to abide by. However, the majority of asset management companies will offer you different features to make asset auditing simpler in the future. Many of the companies also offer Sarbanes Oxley compliance software which will make the job even easier for you.
Hopefully that helped you understand what the Sarbanes Oxley act is and what you have to do to abide by it. No doubt you won’t like the sound of the act, but you can blame Enron.
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