Sarbanes Oxley Act
INTRODUCTION
The Sarbanes-Oxley Act of 2002 came into force on 30 July 2002. It is commonly called SOX or Sarbox. It is a United States federal law passed in response to a number of major corporate and accounting scandals including those affecting Enron, Tyco International, and world Com. These scandals resulted in a decline of public trust in accounting and reporting practices. It is named on sponsors Senator Paul Sarbanes and Representatives Michael G. Oxley. The legislation establishes new or enhanced standards for all U.S. public company boards, management, and public accounting firms. The act established corporate accountability and civil & criminal penalties for white collar crimes. The Act contains 11 titles, and sections.
MAJOR PROVISIONS OF SARBANES-OXLEY ACT'S [N10(new): 5M]
(i) Creation of the Public Company Accounting Oversight Board (PCAOB),
(ii) Requirement that public companies evaluate and disclose the effectiveness of their internal controls and "Attests" such disclosure by independent auditor,
(iii) Certification of financial reports by CEO & CFO,
(iv) Auditor independence, including bans on certain types of work for audit clients,
(v) Companies listed on stock exchanges must have fully independent audit committees,
(vi) Ban on most personal loans to any executive officer or director,
(vii) Accelerated reporting of insider trading,
(viii) Additional disclosure,
(ix) Enhanced criminal and civil penalties for violations of securities law. For E.g. : Maximum jail sentences and larger fines for corporate executives who knowingly and willfully misstate financial statements,
(x) Employee protections allowing corporate fraud.
VARIOUS PROVISIONS OF THE ACT
Title I Public Company Accounting Oversight Board (PCAOB): It is an independent private board, to regulate the accounting profession and establishing Public confidence in the 'Report of independent Registered Public Account Firm'. The PCAOB requires the Public
The Sarbanes-Oxley Act of 2002 came into force on 30 July 2002. It is commonly called SOX or Sarbox. It is a United States federal law passed in response to a number of major corporate and accounting scandals including those affecting Enron, Tyco International, and world Com. These scandals resulted in a decline of public trust in accounting and reporting practices. It is named on sponsors Senator Paul Sarbanes and Representatives Michael G. Oxley. The legislation establishes new or enhanced standards for all U.S. public company boards, management, and public accounting firms. The act established corporate accountability and civil & criminal penalties for white collar crimes. The Act contains 11 titles, and sections.
MAJOR PROVISIONS OF SARBANES-OXLEY ACT'S [N10(new): 5M]
(i) Creation of the Public Company Accounting Oversight Board (PCAOB),
(ii) Requirement that public companies evaluate and disclose the effectiveness of their internal controls and "Attests" such disclosure by independent auditor,
(iii) Certification of financial reports by CEO & CFO,
(iv) Auditor independence, including bans on certain types of work for audit clients,
(v) Companies listed on stock exchanges must have fully independent audit committees,
(vi) Ban on most personal loans to any executive officer or director,
(vii) Accelerated reporting of insider trading,
(viii) Additional disclosure,
(ix) Enhanced criminal and civil penalties for violations of securities law. For E.g. : Maximum jail sentences and larger fines for corporate executives who knowingly and willfully misstate financial statements,
(x) Employee protections allowing corporate fraud.
VARIOUS PROVISIONS OF THE ACT
Title I Public Company Accounting Oversight Board (PCAOB): It is an independent private board, to regulate the accounting profession and establishing Public confidence in the 'Report of independent Registered Public Account Firm'. The PCAOB requires the Public