Xigaware

Whether you are a US company, or just a company with links back to the US, you may be required to know about the Sarbanes Oxley act. If you are a American company and have never have heard of the act, then you have already learnt something new. It’s a law in the US.

The Sarbanes Oxley is an act that was signed into US in 2002. The act was designed to try and stop companies doing what Enron and Worldcom did. Both of these companies were found to have been running on fraud for many years. In that year, it wasn’t required for any companies to present their finance records.

The act simply makes sure that businesses are run correctly, if they are not being run legitimately, the act holds the bosses of the company responsible.

The act means that CEO’s and CFO’s are required to sign the books for the company. They have to sign the books to gaurentee they are not misrepresented and they match the earnings of the company.

If it turns out the records are incorrect, there are a number of punishments available for the Chief Officers that signed the records.

Like I said at the top, you might not be required to follow the act. You only need to abide by the act if your company is based in either the US, UK or Europe and they have listings on the US stock exchange. You would also have to abide by the act if the company is based in the UK or Europe by it’s a subsidiary of an US company.

The Sarbanes Oxley act can be annoying for some US companies. Because the company must report every transaction that has been made, even the sale and purchase of assets is required. This is where people have the problem because all the company’s fixed assets must before recorded.

The process of fixed asset accounting can be expensive and take time. If you attempt to do the job yourself, based on the size of your company, it can take a number of months and just cause more problems. The most efficient way to get a complete audit of your assets is by hiring an external asset management company to do the job.

Unfortunately, it’s definately not a cheap act to abide by. However, a number of asset management companies offer features to make the next time you do an asset audit alot easier and cheaper. Many of the companies also offer Sarbanes Oxley compliance software which will make the job even easier for you.

Hopefully you will now know what the Sarbanes Oxley act is and how you have to abide by it. No doubt you won’t like the sound of the act, but you can blame Enron.

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