Sarbanes Oxley Act of 2002 – SOX Act
The Sarbanes Oxley Act of 2002, otherwise known as SOX, impacted the awareness and monitoring of internal controls. SOX was passed in the wake of Enron, Worldcom, and Tyco scandals of the past in terms of accounting and board of director liability. Modern accounting systems are computer based, and accurate financial reporting depends on reliable, and secure, computing environments. No longer can the business owner ignore that cybersecurity is essential to the success of their business.
Rachel V. Rose, JD, MBA is a Principal with Rachel V. Rose – Attorney at Law, P.L.L.C. located in Houston, TX.
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In this CLE class clip, Rachel discusses Sarbanes Oxley Act of 2002.
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Investors appreciate the new legislation, as SOX protects investors, by improving accuracy and reliability of corporate disclosures. Section 302 specifies that a CEO & CFO must certify the accuracy of reports and internal controls of a company. One instance where you will see section 302 apply, is when a privately held company is seeking a loan, they will want to make sure they fall in line with all the guidelines in order to qualify.
In addition, section 404 states that a corporation must assess the effectiveness of its internal controls and report this assessment annually to the SEC.
For the complete story on the Sarbanes Oxley Act of 2002, check out the full CLE class video by Rachel V. Rose.