Sarbanes Oxley FAQs
Sarbanes Oxley Act of 2002 is a milestone act in the U.S.business regulation history. It was passed by the 107th Congress and on July 30, 2002 when President Bush signed it and made it a law of the land. Here are some Sarbanes Oxley FAQs.
1. What is theSarbanes Oxley Act?
The Sarbanes Oxley Act was brought in order to ensure that the publicly traded U.S. companies ensured transparency and honesty in their financial matters. A number of U.S. companies were found involved in financial irregularities. This resulted in a steep decline in the faith of investors in the securities market which adversely affected the U.S. economy. The U.S. government brought this law in order restore the investor's faith.
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2. How is my company going to be affected by it? If you are with a publicly traded company in the United States, the Sarbanes Oxley Act is going to affect your company. The Sarbanes Oxley Act has certain guidelines of compliance which have to be met. The auditing procedures of your company and the Internal Controls over Financial Reporting will have to be regularly assessed and the reports have to be made public. 3. My company is not yet publicly traded, but we are planning for an IPO soon. What about us? The Sarbanes Oxley compliance guidelines may have to be observed by any private company which is planning to release an IPO. While its not necessary for private companies to comply, if you are planning an IPO soon, you should start observing them in order to ensure that they have already been met when you have released the IPO. 4. Tell me something more about the composition of the Sarbanes Oxley Act. The Sarbanes Oxley Act is divided in sections and eleven titles. Each of these eleven titles is further subdivided into sections. The most important sections of the Sarbanes Oxley Act are Sections 302, 401, 404, 409, 802 and 906. Check these out because they are essential for your business. 5. I have heard something about PCAOB. What is it? The Title 2 of the Sarbanes Oxley Act discusses the PCAOB in detail. PCAOB or the Public Company Accounting Oversight Board is a newly formed private sector non-profit organization. It is meant to regulate the activities of auditors in public companies. 6. What if I am not able to meet the Sarbanes Oxley regulations? Failure to ensure Sarbanes Oxley compliance can result in heavy penalty in the form of fine and imprisonment. An unintentional failure of a corporate officer can land him in prison for 10 years and a fine of $ 1 million. Intentional flouting of the act would entail about $5 million as fine and twenty years in jail. With these detailed facts pertaining to the Sarbanes Oxley FAQs, you can now ensure that your business complies with the regulations. |
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