Sarbanes-Oxley

In 2002 the U.S. government passed the Sarbanes-Oxley Act, designed to hold public companies to far stricter accounting standards and act as a safeguard against corporate fraud. But in July 2007, the U.S. Securities and Exchange Commission relaxed Sarbox requirements. These new guidelines allow auditors to focus on areas of high financial risk and not every aspect of companies finances.

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Independent audit firms both locally and International are impacted by congress’s insertion of Sarbanes-Oxley. There could be some people that view this as a negative or positive depending on where they stand on these issues. Independent audit firms would be responsible for reporting all financial information, as they are public firms.

Sections:

Section 204 states that auditors must report all critical accounting policies and practices to the companies audit committee. Section 203 states that the lead audit and reviewing partner must rotate off the audit every 5 years. Section 201 prohibits any public accounting firm from performing non-audit services for public company audit clients. Section 303 relates to improper influence on conduct of audits. It’s unlawful for any public company officer or director to fraudulently influence, coerce, manipulate, or mislead any auditor for the purpose of rendering the financial statements materially misleading. Section 404 states the auditor shall attest to and report on, the assessment of internal control made by the management of the public company. (Sarbanes-Oxley Act PP).

This information which may have not been made available to the general public years ago is very important and places certain restrictions and limitations on what and how independent firms conducts their accounting and financing practices. These types of audits protect the company and other parties with dealings with them from any misleading or...