This weeks blog entry: a short introduction to SOX compliance before we continue working our way towards the next video. So: let’s suppose your company runs branch offices or subsidiaries in different locations or even countries around the world. With more and more local headquarters on the way business becomes increasingly complex. And accounting errors or fraudulent financial practices are more likely to happen unnoticed, even more so without intent. In the early 2000s for example, this led to a number of accounting scandals in the United States.
That is why, in 2002, US-president George W. Bush signed a law that set new requirements and expanded on already existing laws for all U.S. public company boards and public accounting firms. Officially named “Public Company Accounting Reform and Investor Protection Act“ in the Senate, it is more commonly known as the „Sarbanes-Oxley-Act“. It was designed to protect the interests of investors. Since 2002 the “Sarbanes-Oxley-Act” has been gradually widened to apply to all companies that operate on the public capital market in the United States. Since 2006 a similar law pursues the same goals for all European Union members. To implement SOX Compliance guidelines, companies must set up an in-house audit committee. Also required is the hiring of external independent auditors. Noncompliance to these laws, albeit unintentionally, will be met with punishment.
That – in reasonable brevity – is the deal. Next week we’re gonna provide a solution for avoiding trouble in the form of Shared Services and the week after we’re going to summarize it all in our next video! Stay tuned …
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