In: Accounting
Describe at least two provisions mandated by SOX.
Aection 302 is a mandatory that requires and anticipates senior management of a company to certify the accuracy of the reported and performed financial statements. on the other hand, Section 404 is a requirement that enhances management and auditorsto establish internal controlsand reporting methods on the adequacy of these controls. This Section 404 has very costly implications for publicly traded companies in the view that it is expensive to establish and maintain the required internal controls.
In addition to the financial sector of a business, such as the audits, accuracy and controls, the SOX Act also outlines requirements for information technology (IT) departments regarding the electronic records. The SOX Act does not set forth a set of business practices in this regard but instead defines which company records need to be stored on file and for how long. It does not specify how a business should store its records, only that the IT department is responsible for storing them, according to standards outlined in the SOX Act.
Section 802 of the Act contains the three rules that affect
record keeping;
a)The first deals with destruction and falsification of
records
b)The second strictly defines the retention period for storing
records
c)The third rule outlines the specific types of business records
that need to be stored, whichincludes electronic
communications.