Sarbanes-Oxley Act of 2002

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Sarbanes Oxley Act of 2002

Legislation in the United States, passed in 2002, intended to increase transparency in accounting practices. It was adopted in the wake of a series of scandals involving aggressive accounting on the part of a number of major accounting firms, notably Arthur Andersen. Among other provisions, it created the Public Accounting Oversight Board to regulate accounting firms that provide auditing services. It established and enhanced provisions for auditor independence and financial disclosures to limit potential conflicts of interest. It introduced a requirement that the chief executive officer must sign a corporation's tax return and enhanced punishments for white collar crime. Proponents argue that the Act has increased transparency in public accounting, while critics contend that it has driven business outside the United States.

Sarbanes-Oxley Act of 2002.

Named after its main Congressional sponsors, Senator Paul Sarbanes and Representative Michael Oxley, the Sarbanes-Oxley Act of 2002 introduced new financial practices and reporting requirements, including executive certification of financial reports, plus more stringent corporate governance procedures for publicly traded US companies. It also added protections for whistleblowers.

Officially the Corporate and Auditing Accountability, Responsibility, and Transparency Act, the law is known more colloquially as SarbOx or SOX. It was passed in response to several high-profile corporate scandals involving accounting fraud and corruption in major US corporations.

The law also created the Public Company Accounting Oversight Board (PCAOB), a private-sector, nonprofit corporation that regulates and oversees public accounting firms.

The law has seen its share of controversy, with opponents arguing that the expense and effort involved in complying with the law reduce shareholder value, and proponents arguing that increased corporate responsibility and transparency far outweigh the costs of compliance.

Sarbanes-Oxley Act of 2002 (SOX)

Also known as the Public Company Accounting Reform and Investor Protection Act of 2002.This Act is a federal law that was passed in response to the major accounting scandals and resulting corporate crashes in the beginning years of the twenty-first century. The law imposes enhanced accounting and disclosure standards on public companies, including REITs. In particular, the balance-sheet treatment of real estate values to reflect economic obsolescence,potential contamination,and short-term lease expirations with key tenants are critical issues.It has an indirect impact on private companies because many insurers and lenders are imposing the same requirements on all customers. Further, an exit strategy that depends on selling real estate assets to public companies will need to implement SOX-compliant controls early to facilitate due diligence and obtain the highest price.

References in periodicals archive ?
In an effort to prepare for the requirements of the Sarbanes-Oxley Act of 2002 and reduce risks due to unethical choices, many companies are choosing to create positions referred to as Chief Risk Officers.
Through the Sarbanes-Oxley Act of 2002 and the implementation of Chief Risk Officers, many businesses are striving to meet the goals and challenges surrounding proper corporate governance, and again instill confidence in their many stakeholders.
The Sarbanes-Oxley Act of 2002 ('SOX') puts a new emphasis on timeliness and transparency in financial reporting, and the importance of internal controls in managing public, as well as, private companies" said Garrett Gafke, president and CEO for SeeControl Inc.
In addition, management requires additional time to complete its report on management's assessment of the company's internal control over financial reporting required by Section 404 of the Sarbanes-Oxley Act of 2002.
SAS 70 is also closely related to the Sarbanes-Oxley Act of 2002, making it a critical requirement for any company engaging a third-party to provide software applications and a technology environment to process financial or operational transactions.
Achieving our SAS 70 Type II Report was a significant undertaking and we are pleased to be able to offer our clients what they need to secure greater accountability from their billing and operations activities and meet the requirements of the Sarbanes-Oxley Act of 2002," said Patrick Talty, Vice President of Operations at Info Directions.
In a complaint filed with OSHA pursuant to the employee protection provisions of the Sarbanes-Oxley Act of 2002, alleging whistleblower discrimination, Bechtel had claimed wrongful termination and had sought reinstatement.
It alleged various breaches of state corporate law and a violation of Section 304 of the Sarbanes-Oxley Act of 2002.
The Company is currently in the process of completing its financial statements and its assessment of internal control over financial reporting as of the fiscal year ended July 2, 2005, as required by Section 404 of the Sarbanes-Oxley Act of 2002 ("Sarbanes-Oxley Act").
In addition, the Company requires additional time to complete its report on internal control over financial reporting, required of the Company for the first time for the fiscal year ended June 30, 2005 pursuant to Section 404 of the Sarbanes-Oxley Act of 2002.
The SAS 70 standard provides proof from an impartial third-party that an organization has implemented the policies and processes that keep its information secure, stable and safe to government compliance standards such as the Sarbanes-Oxley Act of 2002.
Although the supply chain is not specifically called out in the Sarbanes-Oxley Act of 2002, section 404 is widely known to affect the movement of goods with regard to reporting their movement and auditing their worth.