Sarbanes Oxley Summary: A Stormy Surprise
Sarbanes Oxley Act of 2002 is one of the acts of the United States which regulate the way publicly traded companies function in the U.S. Sarbanes Oxley history makes it a rather unique act. It is an act that had the support of both the Republican and the Democratic Party. The two parties came together to sponsor the legislation in the 107th Congress of the United States. The act was sponsored by Republican Representative Micheal G. Oxley from Ohio in the House of Representatives and by Democratic Senator Paul Sarbanes from Maryland in the Senate. This is definitely a momentous occasion in the context of Sarbanes Oxley Summary.
Going into the Sarbanes Oxley history, we find that before the Sarbanes Oxley Act was passed, a number of publicly traded companies in the U.S. were found to be involved in financial scandals. There were a number of cases where audit committees were not found to be working seriously. Instances of conflicts of interest among auditors came to light, as well as conflicts of interest in security industry became know to the public. There were even cases of malicious transactions in executive compensation and practices of banking. The Internet bubble burst as well the cases of Enron and WorldCom came to light which seemed to be the last straw on the camel's back. The investor confidence hit rock bottom and the U.S. economy took a severe beating.
The Sarbanes Oxley Act is divided in sections and eleven titles. Each of these titles has its own sections. The first five titles of the Sarbanes Oxley Act are the most important because they deal with the most important clauses ranging from Sarbanes Oxley checklist to Sarbanes Oxley regulations etc. The Sarbanes Oxley checklist now makes it necessary for the companies to keep high degree of control over the storage and flow of the data related to all financial affairs of the company.
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Apart form the regular jobs, the management will now have to certify that they have done a number of checks over the company's internal control over financial reporting. An unintentional mistake by a manager who signs the said certification can land him in prison for 10 years. He will have to cough up $ 1 million as fine. Where this mistake is intentional, and thus a fraud, the imprisonment goes up to 20 years and fine goes up to $ 5 million. The Sarbanes Oxley Act has also brought the CEO of the company into its clutches. Since all the financial data is stored and flows in digital form, the Sarbanes Oxley IT requirements now call for regular auditing of internal communication systems of the company like email and intra-network instant messaging. Apart from this, the information technology infrastructure will have to be secured form any external threats by maintenance of honey pots and IDS (Intrusion Detection Systems). With stringent measures and radical changes pertaining to Sarbanes Oxley Summary, the entire U.S. economy is taken by stormy surprise. |
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