2002 Sarbanes Oxley Act

2002 Sarbanes Oxley Act

Edited by David Barth, 26 January 2012

The Sarbanes-Oxley Act of 2002 is mandatory. ALL organizations, large and small, MUST comply.

Sarbanes-Oxley Introduction
The legislation came into force in 2002 and introduced major changes to the regulation of financial practice and corporate governance. Named after Senator Paul Sarbanes and Representative Michael Oxley, who were its main architects, it also set a number of deadlines for compliance.

The Sarbanes-Oxley Act is arranged into eleven titles. As far as compliance is concerned, the most important sections within these are often considered to be 302, 401, 404, 409, 802 and 906. An over-arching public company accounting board was also established by the act, which was introduced amidst a host of publicity.
Sarbanes-Oxley Compliance
Compliance with the legislation need not be a daunting task. Like every other regulatory requirement, it should be addressed methodically, via proper analysis and study. Also like other regulatory requirements, some sections of the act are more pertinent to compliance than others. To assist those seeking to meet the demands of this act, the following pages cover the key Sarbanes-Oxley sections: Sarbanes-Oxley Miscellaneous
Having studied the above pages, even if you are considering using an external consultant or legal expert, it is well worth taking some basic steps to enhance your position immediately. This not only demonstrates due diligence, but may well reduce the consultancy costs themselves.
One area that perhaps falls into the category is security. In many respects security underpins the requirements of the Sarbanes-Oxley Act. It is therefore important to quickly establish a credible and detailed security policy, which can often be done readily via off the shelf packages.
Finally, perhaps the most important statement on the entire web site: don't put off until tomorrow what can be done today! With other legislation and regulation we have seen far too often organizations leave compliance until the last few days, and subsequently suffer adverse consequences.

Sarbanes-Oxley Act Section 302
This section is of course listed under Title III of the act, and pertains to 'Corporate Responsibility for Financial Reports'.

Summary of Section 302
Periodic statutory financial reports are to include certifications that:
  • The signing officers have reviewed the report
  • The report does not contain any material untrue statements or material omission or be considered misleading
  • The financial statements and related information fairly present the financial condition and the results in all material respects
  • The signing officers are responsible for internal controls and have evaluated these internal controls within the previous ninety days and have reported on their findings
  • A list of all deficiencies in the internal controls and information on any fraud that involves employees who are involved with internal activities
  • Any significant changes in internal controls or related factors that could have a negative impact on the internal controls
  • Organizations may not attempt to avoid these requirements by reincorporating their activities or transferring their activities outside of the United States
Further Information
For more information, select one of the options in the left hand panel, or perhaps visit our page on compliance Sarbanes-Oxley Tools.

Sarbanes-Oxley Act Section 401
This section is of course listed under Title IV of the act (Enhanced Financial Disclosures), and pertains to 'Disclosures in Periodic Reports'.

Summary of Section 401
Financial statements are published by issuers are required to be accurate and presented in a manner that does not contain incorrect statements or admit to state material information. These financial statements shall also include all material off-balance sheet liabilities, obligations or transactions. The Commission was required to study and report on the extent of off-balance transactions resulting transparent reporting. The Commission is also required to determine whether generally accepted accounting principals or other regulations result in open and meaningful reporting by issuers.

The Next Step?
For further information on the SOA, choose one of the options in the panel, or visit our page on compliance Sarbanes-Oxley compliance tools and resources

Sarbanes-Oxley Act Section 404
This section is listed under Title IV of the act (Enhanced Financial Disclosures), and pertains to 'Management Assessment of Internal Controls'.

Summary of Section 404
Issuers are required to publish information in their annual reports concerning the scope and adequacy of the internal control structure and procedures for financial reporting. This statement shall also assess the effectiveness of such internal controls and procedures.

The registered accounting firm shall, in the same report, attest to and report on the assessment on the effectiveness of the internal control structure and procedures for financial reporting.

More Information
For additional information on the act, select one of the options in the left-hand side, or perhaps visit our section covering Sarbanes-Oxley support tools

The Sarbanes-Oxley Act Section 409
This section is listed within Title IV of the act (Enhanced Financial Disclosures), and pertains to 'Real Time Issuer Disclosures'.

Summary of Section 409
Issuers are required to disclose to the public, on an urgent basis, information on material changes in their financial condition or operations. These disclosures are to be presented in terms that are easy to understand supported by trend and qualitative information of graphic presentations as appropriate.

Sarbanes-Oxley Act Section 802
This section is listed within Title VIII of the act (Corporate and Criminal Fraud Accountability), and pertains to 'Criminal Penalties for Altering Documents'.

Summary of Section 802
This section imposes penalties of fines and/or up to 20 years imprisonment for altering, destroying, mutilating, concealing, falsifying records, documents or tangible objects with the intent to obstruct, impede or influence a legal investigation. This section also imposes penalties of fines and/or imprisonment up to 10 years on any accountant who knowingly and wilfully violates the requirements of maintenance of all audit or review papers for a period of 5 years

Sarbanes-Oxley Compliance Tools
The most well known and widely used (and advertised) toolset to assist compliance is the aptly named Sarbanes-Oxley compliance toolkit.

This is a commercial resource consisting of a series of items to explain and simplify the act, and guide you through the compliance process. It includes the following materials:
  • A detailed summary of the act itself in plain English
  • A comprehensive compliance checklist
  • A 'corporate governance' document explaining the key issues
  • A management presentation covering the most important aspects
  • A self-assessment audit committee checklist
  • A detailed guide for the audit committee
Our samples sections contains a number of pages taken directly from the toolkit itself. The toolkit is more fully described on its own web site: Sarbanes-Oxley Toolkit. Certainly, for anyone seeking to get a jump start in understanding the act, and taking those early compliance steps as efficiently as possible, this should prove to be an extremely useful resource.

We will be adding information on further SOA related tools and resources to this section in the near future.

Sarbanes Oxley Act Compliance Toolkit
Understanding and insuring compliance with the Sarbanes-Oxley Act can be a formidable undertaking. It is a complex piece of legislation, and one which demands a serious and planned approach. However, this need NOT be a daunting task.

The Sarbanes-Oxley Compliance Kit is designed specifically to educate, explain, and guide you through the process. It includes a whole series of resources intended to help simplify, and set you on the right path... to help you achieve full compliance as painlessly as possible.

Each item in the kit is of the highest quality, tailor made to cover a different aspect and issue of the act. It includes a presentation, checklist, guidelines.... a whole range of materials specifically put together to both introduce, and take you through this most important of legislation.

Unless otherwise stated, each element is provided in MS-Word format, for ease of use and to enable full tailoring and edit.

The Sarbanes-Oxley Compliance Kit includes the following:
This is a detailed summary of all the act itself.. in plain English! It covers all the important sections, and even includes a set of definitions. It should provide substantial assistance in understanding the main features and requirements.
Further Information on the Sarbanes-Oxley Guide (including Sample Pages)

This is a detailed presentation covering the key aspects of the legislation, specifically sections 302, 404 and 906(a). It is supplied in PowerPoint format for that you can edit and adapt it for internal use.
More Information on the Presentation (including Sample Pages)

This extensive document explains the key issues that management should be considering when seeking to achieve compliance with the stringent Sarbanes-Oxley requirements.
More Information (including Sample Pages)

This checklist is provided to enable each organization to check its level of compliance against the governance requirements described above.
More Information on the Compliance Checklist (including Sample Pages)

This self-assessment Audit Committee Checklist is designed to simplify the checking of your own Audit Committee to insure full compliance with the requirements of the act.
More Information (including Sample Pages)

One of the most significant aspects of the act pertains to the demands placed upon the Audit Committee of the company in question. This guide sets out the main requirements of the act in respect to this, and provides an insight into the key activities that an Audit Committee member should be familiar with. Also includes a draft Audit Committee Charter.
More Audit Committee Information (including Sample Pages)

The Sarbanes-Oxley Compliance Toolkit contains a variety of other items designed to assist the compliance process:

Sarbanes-Oxley Internal Controls
This working paper offers guidelines and advice regarding the establishment of internal controls and responsibilities.

How to Use the Compliance Toolkit
This document explains how the Sarbannes-Oxley Compliance Toolkit is structured and describes the key features of the various parts of the kit.
More Information (including Sample Pages)

We are pleased to be able to offer all these items within the definitive Sarbanes-Oxley Compliance Kit. To purchase and download directly to your PC for a special price of just $199, simply visit our Purchase Page.

Sarbanes-Oxley Compliance Toolkit
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