Easy Guide For The Sarbanes Oxley Act
If you are an American company, then you might 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 an act in the United States.
The Sarbanes Oxley is an act that was signed into US in 2002. It was designed to put a stop to the things that went on it Enron and Worldcom. Both of these companies were found to have been running on fraud for many years. In that year, it wasn’t required for any companies to present their finance records.
The act simply makes sure that businesses are run correctly, if they are not being run legitimately, the act holds the bosses of the company responsible.
The act forces the Chief Executive Officers and the Chief Financial Officers to sign the books for the business. They must sign the books before handing them over to ensure that the information is true and it represents the earnings of the company.
If this is not done or it turns out the records are false, there are some hard punishments that come down on the Chief Officers of the company.
Like I said at the beginning, you may not have to abide by the act. You only need to abide by the act if you company has listings within the US stock exchange and you are based in either the US, UK or Europe. You should also be required to follow the act if your company is based in Europe and it;s a subsidiary of a US company.
The act can be very annoying for some companies. Because the company must report every transaction that has been made, even the sale and purchase of assets is required. 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 try and do the job within your company, it can often take several months and result in incorrect listings. The cheapest and quickest way to get the list of assets would be to outsource the job to an asset management company.
Unfortunately, it can still be expensive to do. 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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