An Overview Of Sarbanes Oxley Act
On July 30th 2002, President Bush signed and approved the Sarbanes Oxley act. Thereafter, this act has turned over the processes of the financial reporting. This article aims to make you acquainted with the policies of the Sarbanes Oxley act. In this article, you will find a Sarbanes Oxley overview.
With the implementation of this act, the Congress is now able to make certain changes to the financial reporting process in corporate world. The major changes include certification by the officers and real-time disclosure of information. This act strives to make the policies and the business of the public companies transparent and to increase the independence of the companies as well as the issuers.
SEC also comes under regular review in order to ensure its dynamism. It is necessary to meet the new requirements of the audit committee for every company. There is a new prohibition on the loans and some trades for the senior executives and the audit officers of the public companies.
On April 26 2003, SEC ordered NYSE and NASDAQ to restrict the listing of any public company whose audit committee does not conform to the mentioned new requirements that tend to affect the auditor appointment, oversight and compensation. An in depth Sarbanes Oxley analysis reveals that it is required that the audit committee should have the directors that are independent. According to this policy, a certification from the CEOs and CFOs is required in each report.
The report should certify the financial statements that conform to the Sections 13 (a) and 15(d) of the Securities and Exchange Act. In case any false certification is tendered, the certifying officers will be penalized with the amount of $1,000,000 or 10 years of imprisonment or both. For willing violation of the rules and codes, the certifying officer may be penalized with $5,000,000 or 20 years of prison sentence or both. The directors, senior executives and the audit officers are restricted from renewal of any personal loans. The companies are also required to make no extension or modification in personal loans for these officers.
This rule became effective on August 29 2002. According to this act, the deadline for the reporting of insiders on the trading of their company was fixed at two business days from the date of transaction.
This act was made effective immediately. According to it, every public company is required to disclose the additional information regarding the financial operations of the company. The information is to be disclosed on rapid basis whenever the SEC demands it.
Although this act is very beneficial, the overview of this act suggests that it has also contributed in creating a number of new crimes of the violations of the securities. Sarbanes Oxley compliance procedure is very strict yet complicated. It has been observed that several destructive and falsifying records have been created. These records can lead to bankruptcy or federal proceedings. Several people have developed certain fraud schemes to defraud investors. Several people have claimed false compliance. Therefore, Sarbanes Oxley overview suggests a careful monitoring of the companies trade is required to avoid the fraud and crimes. This can only be done by increasing awarest among employees by providing them latest Sarbanes Oxley articles and information.
Article by Kevin Bing at http://www.SarbanesOxleyReviews.com
For more great free information on everything you should know about Sarbanes Oxley visit => disadvantages of sarbanes oxley act and sarbanes oxley summary
cool