The Sarbanes-Oxley Act
The Sarbanes-Oxley Act of 2002 is a United States federal law enacted on 30th July 2002 in response to a number of major corporate and accounting scandals. It is considered to be the most far-reaching US legislation affecting financial services, accounting, auditing, financial reporting and professional services since the US securities and exchange laws of the early 1930s.
There are companies that operate in the UK that have to comply with this US legislation whose executives could face up to 20 years in prison if found guilty of violating this U.S. law. So, what does The Sarbanes-Oxley Act mean for those executives that fall within its scope?
The legislation establishes new or enhanced standards for all US public company boards, management and public accounting firms. It does not apply to private companies.
The Act establishes a new quasi-public agency, the Public Company Accounting Oversight Board, or PCAOB, which is charged with overseeing, regulating, inspecting, and disciplining accounting firms in their roles as auditors of public companies. The Act also covers issues such as auditor independence, corporate governance, internal control assessment, and enhanced financial disclosure.
Sarbanes-Oxley contains 11 measures that can be summed up as follows.
The need for training
This Act is comprehensive and is one of the most challenging pieces of US legislation ever written. As such the law is not complex, it is the full and proper implementation of this law that is immensely challenging.
The senior management of a company that needs to comply with the Act have to understand the law – it is very hard on the executives found guilty of non-compliance at a personal level. The criminal penalties for serious violations of the Act include fines of several million pounds or up to 20 years in prison. It is advisable to get your executives trained thoroughly to ensure that the company achieves full compliance of the Act.
Should you want to refer to a copy of the Act please click here.
We provide an online training solution, for details please click here.
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