Does Your Business Understand The Sarbanes Oxley Act?
If you are a company with connections to the US, 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 a United States act.
The Sarbanes Oxley act is an act that was signed into US law in 2002. It was designed to put a stop to the things that went on it Enron and Worldcom. Both of these companies announced that they had been running on fraudulent deals for several years. In that year, it wasn’t required for any companies to present their finance records.
What it does is it makes sure that the companies are run safely and lawfully, if it’s found that they are not, the owners are help resonsible for any wrong doing.
The act means that CEO’s and CFO’s are required to sign the books for the company. 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 it turns out the records are incorrect, there are a number of punishments available for the Chief Officers that signed the records.
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 should also be required to follow the act if your company is based in Europe and it;s a subsidiary of a US company.
Some companies find the Sarbanes Oxley act to be a real pain. Because the company is required to report every single business transaction, even the sale and purchase of company 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 most efficient way to get a complete audit of your assets is by hiring an external asset management company to do the job.
Unfortunately, it’s still not a cheap process 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 you will now know what the Sarbanes Oxley act is and how you have to abide by it. No doubt you won’t like the sound of the act, but you can blame Enron.
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