Sarbanes-Oxley Act 2002


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Sarbanes-Oxley Act 2002

  1. 1. Presented By Syed Kashif Shah (Group Leader) Group Members Kashif Ali , M.Hamid Waqar Khan BBA 7th
  2. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 13. 10.Corporate Tax Return  Title X  The Chief Executive Office Should Sign The Company Tax Return
  14. 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. 15. Sox Act Sections  Sox Section 302  Sox Section 401  Sox Section 404  Sox Section 409  Sox Section 802  Sox Section 906
  16. 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. 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. 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. 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. 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. 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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