Sarbanes-Oxley Act 2002

Objectives:

• Protect investors by improving the accuracy and reliability of corporate disclosures made pursuant to the securities laws
• Creating new standards for corporate accountability
• Creating new penalties for acts of wrongdoing
• Formalizing and strengthening internal checks and balances within corporations
• Instituting new levels of control and sign-off designed to
• Ensuring full disclosure in financial reporting
• Ensuring full transparency corporate governance is transactions

Scope:

• All public companies in the USA
• International companies that have registered equity or debt securities with the Securities and Exchange Commission
• Accounting firms providing auditing services

Main Architects:

• Senator Paul Sarbanes
• Representative Michael Oxley

Effective Date:
Signed on the law by President Gorge W. Bush on July 30, 2002.

Structure:
Divided into 11 sections called titles. Sections that are more pertinent to compliance:

• Sarbanes-Oxley 302
• Sarbanes-Oxley 401
• Sarbanes-Oxley 404
• Sarbanes-Oxley 409
• Sarbanes-Oxley 802

Audit Requirements:
The Act requires all financial reports to include an internal control report.

Penalties:

• Up to $1 million and imprisonment for up to ten years
• Up to $5 million and imprisonment for up to twenty years for willful wrongdoing

Role of IT:

• IT security is important under Sarbanes-Oxley act because IT being the backbone of all modern-day industries, it is in the core of the accuracy, reliability and integrity of that reporting. It is responsible for protection of sensitive user information too
• Software design standards COSO (Committee of Sponsoring Organizations of the Tradeway Commission, 1985)and COBIT (Control Objectives for Information and related Technology framework, 1986)
• SarbOxPro program offers standard libraries and interface

Some Online Resources:

• SOX Law
• SOX Online
• SOX Wikipedia