Executive Summary of Sox 2002

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Executive Summary of the Sarbanes-Oxley Act of 2002 P.L.107204

On July 30, 2002 President Bush signed into law the Sarbanes-Oxley Act of 2002. The law was intended to bolster public confidence in our nation’s capital markets and imposes new duties and significant penalties for non compliance on public companies and their executives, directors, auditors, attorneys and securities analysts. The full implications of the legislation will come after further actions by the Securities and Exchange Commission and the newly created Public Company Accounting Oversight Board. Most of the provisions of this new law only apply to public companies that file a form 10-K with the Securities and Exchange Commission their auditors and securities analysts. This summary is intended to give a broad overview of the new legislation and is not intended to constitute legal advice on the implications of this legislation. Title I: Public Company Accounting Oversight Board Establishes a five member Public Company Accounting Oversight Board (with general oversight by the SEC) to: Oversee the audit of public companies Establish audit report standards and rules Inspect, investigate and enforce compliance on the part of registered public accounting firms and those associated with the firms Requires public accounting firms that participate in any audit report with respect to any issuer to register with the Board (this act also applies to foreign public accounting firms that prepare or furnish an audit report for an issuer) Directs the Board to establish (or modify) the auditing and related attestation standards, quality control and the ethics standards used by registered public accounting firms to prepare and issue audit reports. Requires auditing standards to include (among other things): Seven year retention period for audit work papers Second partner review and approval Evaluation of whether internal control structure and procedures include records that accurately reflect...