Ways the Sarbanes-Oxley Act of 2002 Impacts Your Business

The Sarbanes-Oxley Act is a federal law put into place in 2002 to respond to the Enron and WorldCom scandals. The act has been updated since its original implementation. Still, the basic premise of the legislation remains: any publicly-traded company must maintain an accurate and reliable system of internal accounting controls and procedures for financial reporting. If they don’t, there are harsh penalties for those who do not follow SOX compliance. In this article, we will be discussing ways that the Sarbanes-Oxley affects your business.

What is the Sarbanes-Oxley Act of 2002?

The Sarbanes-Oxley Act is a federal law put into place in 2002 to respond to the Enron and WorldCom scandals. The act has been updated since its original implementation. Still, the basic premise of the legislation remains: any publicly-traded company must maintain an accurate and reliable system of internal accounting controls and procedures for financial reporting. If they don’t, there are harsh penalties for those who do not comply with this law.

How Does it Affect your Business?

The Sarbanes-Oxley Act of 2002 affects your business by requiring that you implement and maintain a system of internal controls. This means more than just complying with the law, though – it also requires regular monitoring and evaluation, as well as providing documentation to prove compliance if necessary.

Pros and Cons of Implementing this Act in your Company?

The biggest pro to implementing the Sarbanes-Oxley Act of 2002 is that you are protecting your business and its resources. You’re also saving money in legal fees if it ever comes down to litigating issues related to this law, which can be very expensive. One con is that complying with all aspects of the action takes time and money.

Tips for Compliance with the Sarbanes-Oxley Act

Here are some tips for compliance with the Sarbanes-Oxley Act of 2002:

• Ensure that your company’s board is fully informed about all aspects of the law. This includes any applicable rules or regulations, as well as what you’re doing to comply with them. It also means keeping minutes for important meetings and having an updated list of board members.

• Implement a system for compliance documentation, including your policies and procedures manual and the actual records they are based on. This means having all financial transactions recorded following company policy, whether done by hand or electronically.

• Make sure that you have an updated chart of accounts recorded according to your company’s policies and procedures.

• Be sure to document all financial reporting and have a log of any accounting changes made during an annual audit.

• Your board members should also be fully informed on how they can report financial fraud or wrongdoing through internal channels within the company. This means that they can report issues to the board, as well as management and staff. It’s also a good idea for your company to have an independent audit committee responsible for monitoring internal controls and compliance with the Sarbanes-Oxley Act of 2002.

If you have a business subject to the Sarbanes-Oxley Act, make sure you’re complying with all of its requirements. If you have trouble figuring out how to comply, hire someone to help you set everything up.