Various Sections Related To Sarbanes- Oxley Compliance

Sarbanes Oxley Act was signed on 30th July 2002 in the United States. This legislation introduced few major changes for regulating the financial practices and corporate governance. This law was basically passed to curb the several scandals that were originating in the corporate and accounting field. These scandals usually developed due to the diminishing public trust in accounting and reporting. This legislation is divided into eleven sections. In these eleven titles, there are some sections that include the key to compliance. Addressing Sarbanes Oxley compliance is a very important task and requires a planned movement. One needs to analyze all the events carefully and the plan the compliance.

The act has certain sections which are dedicated to propound Sarbanes Oxley compliance.

Sarbanes- Oxley Act Section 302 falls under the title III of this legislation. This section basically relates to the Corporate Responsibility of financial reports. According to this section, the periodic financial reports should certify that the report has been carefully reviewed by the signing officers. Authenticity of report and the fact that it is devoid of any misleading or false statements is also to be certified. Please note that the signing officers will be held responsible for the internal controls, as they have to evaluate these internal controls and report their findings within three months.

According to Sarbanes- Oxley Act Section 401, the financial statements are to be published by the issuers. These statements should be correct and the presentation of these statements should not contain any incorrect statements or misinformation. According to this section, these statements should also include all the material of balance sheet liabilities. This report should also contain the details of obligations or transactions. This section also states that the commission should study and report the extent of the off-balance transactions.

Sarbanes-Oxley Act Section 404 is another important compliance related section. It falls under the fourth title of this legislation. This section relates to the 'Management Assessment of Internal Controls'. As stated in this section, the issuers should publish information in their annual reports that state the scope and capability of the structure of internal control and the financial reporting procedures. According to this statement, the effectiveness of such internal controls and reporting should also be assessed. This section also states that in the same report, the registered firm should attest to assessment and report on the effectiveness of internal control financial reporting procedures.

Sarbanes-Oxley Act Section 409 is another title IV, compliance related clause of this legislation. This section lays down the concept of 'Real Time issuer Disclosure'. According to this section, it is mandatory for the issuers to disclose to the public, the details of the material changes that occurred in their financial condition and operations. These disclosures should be presented to the public in easy terms so that they understand them easily.

One more section to be looked into is 803. This section falls under the Title VIII of the legislation. According to this title, penalties will be imposed on the people who attempt to alter, destroy, mutilate, conceal or falsify the records or documents. The sentence can also extend to imprisonment up to 20 years. For those who intentionally violate the requirements of maintenance of all papers for a period of 5 years, can be imprisoned up to the period of 10 years.

All these sections are very important for Sarbanes Oxley compliance. To plan compliance, one needs to go through these sections carefully and analyze them so as to achieve the aims.