Overview

What Is The Sarbanes-Oxley Act?

The American Sarbanes-Oxley Act (referred to by some as "Sarbox") was enacted in 2002 in the wake of accounting scandals in companies such as Enron and Tyco. It is a set of rules and procedures designed to ensure that accuracy of financial statements.

What New Rules Does It Create?

While strict financial reporting standards are an important part of the Act the most significant aspect is the new requirement that CFOs, CEOs and auditors sign off on the financial reports and take personal responsibility for their validity. This responsibility has resulted in the need to ensure tight controls and oversite at every step of the financial process.

Who Does It Apply To?

Compliance with this act is mandatory for all publicly traded companies in the United States. This makes compliance a significant issue for any organization doing business with these American companies. In addition, Evron believes that the S-O Act will have far-reaching implications over the long term for all businesses throughout North America, as the rules are adopted as "best practives" and shareholders and government demand that corporate directors and officers be personally accountable for the accuracy of financial disclosures.

Related Software

There are a number of software packages which can help you create an effective internal control structure and allow you to report on your financial information on a rapid and current basis. Evron will be promoting a number of these solutions. The first is below:

PAYSTATION - Secure cheque-writing capability

PayStation is a cheque printing and security application for BusinessVision that is designed to assist cheque issuers with printing, writing, and signing customized company cheques on standard or personalized paper stock (ie. one paper stock for multiple cheque types and purposes), in a secure, flexible, and cost-effective manner. Features and options include MICR characters, fraud deterrent security fonts, encrypted digital signatures, multi-level password controlled access, unlimited bank accounts and cheque styles, anti-tampering features, and more.

Paystation Details >

Selected Sections of The Sarbanes-Oxley Act

Section 302: Corporate Responsibility For Financial Reports.

The CEO and CFO of each issuer shall prepare a statement to accompany the audit report to certify the "appropriateness of the financial statements and disclosures contained in the periodic report, and that those financial statements and disclosures fairly present, in all material respects, the operations and financial condition of the issuer." A violation of this section must be knowing and intentional to give rise to liability.

Section 404: Management Assessment Of Internal Controls

Requires each annual report of an issuer to contain an "internal control report", which shall:

(1) state the responsibility of management for establishing and maintaining an adequate internal control structure and procedures for financial reporting; and

(2) contain an assessment, as of the end of the issuer's fiscal year, of the effectiveness of the internal control structure and procedures of the issuer for financial reporting.

Each issuer's auditor shall attest to, and report on, the assessment made by the management of the issuer. An attestation made under this section shall be in accordance with standards for attestation engagements issued or adopted by the Board. An attestation engagement shall not be the subject of a separate engagement.

Section 409: Real Time Disclosure

Issuers must disclose information on material changes in the financial condition or operations of the issuer on a rapid and current basis.

Visit the American Institute of Certified Public Accountants for a summary of the Sarbanes-Oxley Act >