Question

Assuming that you are the controller for a publicly traded company, your CFO has asked you to prepare a presentation for the accounting department personnel and the public auditors about the importance of the SOX Act and the requirements and responsibilities that the Act establishes for the auditors in charge of an annual audit. After the presentation, the CFO wants all accounting personnel and public accounting auditors to understand the regulations and guidelines established by the SOX Act and also for you to provide recommendations as to how the Act's principles can be improved to make American corporations more ethically responsible.

Provide recommended sanctions to be imposed on those who do not comply with the SOX Act provisions, and whether or not the sanctions should be stiffened or should include other personnel in the organization.

Answer 1

Sarbanes-Oxley Act (SOX ACT)

Im 2002, the united states congress passed the act called SOX ACT, in order to protect the interest of shareholder and for the general public from accounting errors and also from fraudulent practices in the enterprises, and also to improve the accuracy of the corporate disclosures.

The act the deadlines fo the compliance and publishes rules on requirements , in order to improve corporate governance and accountability. This act plays an important role

Importance of SOX ACT

- It help to communicate compliance a base line of financial assurance in pubically traded companies and

- SOX clean the market of less financially reliable companies when new publically traded entries and have command higher IPO pricing

- It help to risk triage , this shows taht not all risk are equally create

- SOX compliance provide benefit to the companies by giving them starting points for assets analysis

- Under this organisation can predict the standard they will be held and understanding risk.

- Focused risk assesment understand the land scap of organisations risk for conrol

- It help to control structure strebgthening accordingly section 302 and 404 require documentation of control including operations mannual , personal policies and recorded control process.

-By this type of documentation which is mandatory for many organisation may find the process comfort

- The main importance of SOX compliance is better control , awareness and help to control fit into the environment with transpirancy

- SOX assesment is helpful to auditor during internal control and become more aware o fhow control activities to the financial success of the organisation

- This process may also highlight the inefficiency in the documentation while generation and stored

- Better audit for a strong majority of public companies namely 85% are involved

- The audit committee is responsible for broad overview of organisation risk management under which SOX compliance falls

Recommendations

-Interbal audit is primary responsible for the execution of these activity in one out of three companies

-for this better and more effective and the efficient operations leads to better audit outcomes.

- due to efficient financial reporting SOX was to provide transpirancy and financial reporting

- SOX compliance would utilise a top down approach to drive efficiency and effectiveness

- It focus on area of high risk and significant accounts and processes and location

-This will be recommended as they intergerate IT and business process to maximise the benefit of control.

- SOX compliance require team collaboration and help to build working relationship