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Sarbanes-Oxley Act 2002
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Sarbanes-Oxley Act 2002


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  • 1. Presented By Syed Kashif Shah (Group Leader) Group Members Kashif Ali , M.Hamid Waqar Khan BBA 7th
  • 2. Sarbanes-Oxley Act 2002  Nick Name(s)=Sabanes-Oxley, Sarbox, SOX  Enacted By The 107th United States Congress  Passed The House on April 24, 2002 Votes 334-90  Passed The Senate on July 15, 2002  Signed Into law by President George W.Bush on July 30, 2002
  • 3. Major Elements  1.Public Company Accounting Oversight Board (PCAOB)  2.Auditor Independence  3.Corporate Responsibility  4.Enhanced Financial Disclosures  5.Analyst Conflicts  6.Commission Resources and Authority  7.Studies and Reports  8.Corporate and Criminal Fraud Accountability  9.White Collar Crime Penalty Enhancement  10.Corporate Tax Return  11.Corporate Fraud Accountability
  • 4. 1.Public Company Accounting Oversight Board (PCAOB)  Title 1  Provide Independent Public Accounting Firms Audit Services (Auditors)  register public accounting firms that prepare audit reports for issuers.  set auditing, quality control, ethics, independence and other standards relating to the preparation of audit reports of issuers  set auditing, quality control, ethics, independence and other standards relating to the preparation of audit reports of issuers
  • 5. 2.Auditor Independence  Title II  Establishes Standards for External Auditor Independence  Address new Auditor Approval Requirements  Auditor Reporting Requirements  Restricts Auditing firms from Providing non-Audit services (e.g Consulting) for same clients
  • 6. 3.Corporate Responsibility  Title III  Mandates That Senior Executives Take Responsibility for Accuracy & Completeness of CFR’s.  Interaction of External Auditors & Corporate Audit Committee  Penalties for Non-Compliance
  • 7. 4.Enhanced Financial Disclosures  Title IV  It describe Enhanced Reporting Requirements  Off-balance Sheet Transactions  Pro-forma Figures  Stock Transactions  It Requires Timely Reporting of Material in Financial Condition
  • 8. 5.Analyst Conflicts of Interest  Title V  It Includes Measures & Designed To help Restore Investor  It defines Codes of Conduct for Securities analysts  Disclosure of Knowable Things  To Facilitate Investor
  • 9. 6.Commission Resources And Authority  Title VI  Defines Practices to restore Investor Confidence      Securities Analysts. It also Defines The SEC’s Authority To Stop Those Professionals Who Which don't follow the Predefine Conditions Broker Dealer Advisor
  • 10. 7.Studies And Reports  Requires The Comptroller General And SEC to Perform Various Studies and Report Their Findings  Studies And Reports Include The Effects of Consolidation of Public Accounting firms  The Role of Credit Rating Agencies In the Operation of Securities Markets  Securities Violations and enforcement Actions
  • 11. 8.Corporate And Criminal Fraud Accountability  Title VIII  It Refers To The “Corporate and Criminal Fraud Accountability Act”  It Describes Specific Criminal Penalties for Manipulation, Destruction of Financial Records  OR Other Interference With Investigations, While Providing Certain Protections for Whistle-Blowers
  • 12. 9.White Collar Crime Penalty Enhancement  Title IX  This Section is Also Called “White Collar Crime Penalty Enhancement Act”.  This Section Increases The Criminal Penalties associated with White Collar Crimes & Conspiracies  It Recommends & Specifically adds Failure to Certify Corporate Reports as a Criminal Offense
  • 13. 10.Corporate Tax Return  Title X  The Chief Executive Office Should Sign The Company Tax Return
  • 14. 11.Corporate Fraud Accountability  Title IX  It Identifies Corporate Fraud & Records Tampering as Criminal Offense And Joins those Offenses To Specific Penalties  The SEC To Restore To Temporarily Freezing Transactions or Payments That have been deemed “Large” or “unusual”
  • 15. Sox Act Sections  Sox Section 302  Sox Section 401  Sox Section 404  Sox Section 409  Sox Section 802  Sox Section 906
  • 16. Sox Section 302:Disclosure of Controls  The Act Mandates a set of Internal Procedures Designed to ensure Accurate financial Disclosure  The Signing officers Must Certify that they are “Responsible for Establishing & Maintaining Internal Controls” & “Have Designed such controls to ensure that material Information relating to the Company & its Consolidated Subsidiaries is made known to such officers by others within those entities, Particularly during the period in which the Periodic Reports are Being Prepared  External Auditors Opinion
  • 17. Sox Section 401:Disclosures In Periodic Reports (Off-Balance Sheet Items)  All materials of of-Balance Sheet Items must be Disclose  To Follow the Accounting Principles
  • 18. Sox Section 404:Assessment of Internal Control  Issuers are required to publish information in their annual reports concerning the scope and adequacy of the internal control.  structure and procedures for financial reporting.  This statement shall also assess the effectiveness of such internal controls and procedures.  The registered accounting firm shall, in the same report, attest to and report on the assessment on the effectiveness of the internal control structure and procedures for financial reporting.
  • 19. Sox 409:Enhanced Financial Disclosures  Issuers are required to disclose to the public, on an urgent basis, information on material changes in their financial condition or operations.  These disclosures are to be presented in terms that are easy to understand supported by trend and qualitative information of graphic presentations as appropriate.
  • 20. Sox Section 802:Criminal Penalties for Influencing US Agency Investigation/Proper Administration  This section imposes penalties of fines and/or up to 20 years imprisonment for destroying, mutilating, concealing, falsifying records, documents or tangible objects with the intent to obstruct, impede or influence a legal investigation.  This section also imposes penalties of fines and/or imprisonment up to 10 years.
  • 21. Sox Section 902:Criminal Penalties for CEO/CFO Financial Statement Certification  Certification of Periodic Reports  When any Executive (CEO/CFO) Certify any      Discomfort Statements…… Fines $1000000 (1 Million $) $5000000 (5 Million $) Imprisoned 20 years $5000000 (5 Million $) Imprisoned 20 Years=Both
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