Related Sponsors

How does Sarbanes-Oxley impact my company?

Home » Accounting » Sarbanes-Oxley » How does Sarbanes-Oxley impact my company?

First of all, it is important to note that Sarbanes-Oxley does not regulate all companies (though it does regulate most). Any publicly traded companies that operate in the United States, even if they are not based in the United States, are subject to Sarbanes-Oxley. For this reasons, some small companies have taken themselves off the public stock exchange, so that they can avoid the Sarbanes-Oxley red tape and continue doing business as normal.

Assuming that your company is a publicly traded company that does business in the United States, a primarily requirement of Sarbanes-Oxley is that you must monitor and report on your company�s internal controls. Internal controls are actions and policies that a company uses to achieve goals, especially in the financial realm. Sarbanes-Oxley makes it necessary for you to watch and document both the methods your company uses and the results these methods produce.

In addition, Sarbanes-Oxley requires your company to submit an annual assessment of the effectiveness of internal auditing to the SEC. In other words, you not only have to monitor and document your finances, you also need to report on those financial practices to the SEC.

In a related issue, Sarbanes-Oxley ensures that accounting firms no longer check themselves; corporations must use audit committees consisting of outside individuals. The PCAOB and the SEC oversee this framework. In the end, the federal government is basically requiring much more oversight of corporate financial practices than it has in the past; some of this oversight is done by the government and some is done by the corporation itself.

Next Page: How does Sarbanes-Oxley impact executives?

Related Sarbanes-Oxley Articles