The Sarbanes-Oxley Act

Paper Summary:

The paper discusses how financial professionals are assisting their organizations in the implementation of Section 404 of the Sarbanes-Oxley Act (SOX) (2002). The paper highlights how the public accounting profession is affected by this Act including the issues relating to whether or not a company should be publicly listed on a stock exchange. The paper confirms that many companies chose to stay privately held as a direct result of the costs and level of disclosures necessary to comply with SOX requirements. The paper shows that the burden of compliance on publicly-traded companies is very significant due to the high costs of the implementation of software technology etc. The paper concludes that for the financial professional the need for creating a process-centric view of their organizations is critical.

Outline:
Preparing for a SOX Audit
Conclusion

From the Paper:

"The greatest contribution financial professionals can make to their organizations is in preparing for a SOX Audit including the IT-related tasks and requirements. From a public accounting standpoint, the significant costs of first re-architecting the many financial processes of their companies to be SOX compliant, then working to ensure audits will be accomplishable are two major strategic investments companies working to attain SOX compliance need to take on. The culmination of efforts at compliance, both for existing publicly-traded companies, and those that choose to go public on exchanges in the U.S. to raise capital both have their moment of truth when a SOX audit of their financial, operations, sales and pricing, logistics, and fulfillment processes and systems are all evaluated from the standpoint of aligned with the requirements of Section 404. As Congress kept the wording of Section 404 as non-prescriptive, there is significant variation in how both companies and services organizations interpret this standard. What this paper looks to do is explain at the audit level what is required of financial professionals, as the audit must be passed for any publicly-traded company to continue operating without fines and penalties."

Sample of Sources Used:

• AMR Research (2005)- SOX Spending for 2006 to Exceed $6B. John Hagerty and Fenella Sirkisoon. Tuesday November 29, 2005. Accessed from the Internet on June 23, 2007: http://www.amrresearch.com/Content/View.asp?pmillid=18967
• Columbus and Murphy (2002) - Re-orienting Your Content and Knowledge Management Strategies. AMR Research. Boston, MA. Report and research findings published October 2002. Retrieved June 23, 2007: http://www.lwcresearch.com/filesfordownloads/ReorientingYourContentandKnowledgeMgmtStrategy.pdf Economist (2006) - Virtual champions. Economist Magazine. June 1, 2006. Retrieved from the Internet on June 23, 2007: http://www.economist.com/surveys/PrinterFriendly.cfm?story_id=6969722
• Sarbanes-Oxley Act (2002) - U.S. Senators Sarbanes and Oxley. Passed in 2002 by both U.S. House of Representatives and U.S. Senate. Text viewed on the Internet on June 23, 2007: http://www.aicpa.org/info/sarbanes_oxley_summary.htm

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