28 August 2009
Easy Guide For The Sarbanes Oxley Act
Posted by articleranks under: Money .
Whether you are a US company, or just a company with links back to the US, you may be required to know about the Sarbanes Oxley act. If you are a American company and have never have heard of the act, then you have already learnt something new. It’s a United States law.
The Sarbanes Oxley act is an act that was signed into US law in 2002. The act was designed to try and stop companies doing what Enron and Worldcom did. Both of these companies were found to have been running on fraud for many years. At that current time, the companies weren’t required to show their records to the US government.
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 have to sign the books to gaurentee they are not misrepresented and they match the earnings of the company.
If the act is not abided by or the records are found to be false, the Chief Officers can be punished by the government.
Like I said at the top, you might not be required to follow the act. You only need to abide by the act if your company is based in either the US, UK or Europe and they have listings on the US stock exchange. You will also have to abide by the act if your company is based in the UK or Europe and it’s a subsidiary of another US company.
The Sarbanes Oxley act can be annoying for some US 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 it yourself, it can take several months based on the size of your company. 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 softwarewhich will make the job even easier for you.
Hopefully you will have learnt what the Sarbanes Oxley act it, whether you need to abide by it, and how you do it if you are required to. You most likely won’t like the act, but you can blame it on Enron and Worldcom.
Comments are closed.