Sarbanes-oxley act

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Sarbanes-Oxley Act

What is the Sarbanes-Oxley Act (SOA)?
Congress passed the Sarbanes-Oxley Act (SOA) of 2002 after the highly publicized corporate accounting scandals at Enron, Tyco, andWorldcom. SOA was created to make corporate executives more responsible for their companies' financial statements.
SOA requires companies to follow strict accounting practices to avoid large fines and,in some cases, prison sentences.
NOTE: The Sarbanes-Oxley Act is often referred to as SOX, SarBox, S-O, Sarbanes-Oxley, and SOA

Sarbanes-Oxley Section 404

What You Need to Know About Section404
Section 404 of the Sarbanes-Oxley Act (SOX) says that publicly traded companies must establish, document, and maintain internal controls and procedures for financial reporting. It also requirescompanies to check the effectiveness of internal controls and procedures for financial reporting.
In order to do this, companies must
• Document existing controls and procedures that relate tofinancial reporting.
• Test their effectiveness.
• Report on any gaps or poorly documented areas.

Sarbanes-Oxley Section 404 Compliance

What is needed for Sarbanes-Oxley (SOX) Section 404documentation compliance?
Section 404 of the Sarbanes-Oxley Act has sent companies scrambling to standardize and update their procedures for SOX documentation compliance. Many companies arediscovering that their procedures are incomplete, outdated, or inadequate. To make matters worse, most corporations lack the tools needed to track the effectiveness of procedures and internal controls.
Toobtain SOX Section 404 documentation compliance, some key issues must be addressed:
• Policies and procedures must be documented. SOX requires that key financial and accounting processes must be clearlystated and presented. In addition, all financial software applications must be documented.

• Tools must be implemented to track the effectiveness and timeliness of the policies and procedures....
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