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The Sarbanes-Oxley Act of 2002
is the most sweeping legislation affecting corporate governance,
disclosure and financial accounting in over a generation. (Click
here to read the text of the Sarbanes-Oxley Act.)
Specifically, Sections 302
and 404 require that CEOs,
CFOs, independent auditors and committees:
- Certify the accuracy of financial statements and disclosures
- Indicate in each periodic report whether or not there were
significant changes in internal controls or related factors
since their most recent evaluation, and disclose all deficiencies
in the design or operation of internal controls
- Provide auditor’s attestation to, and report on, management’s
assessment of the internal controls and procedures for financial
reporting
- Report that controls and procedures for financial reporting
and disclosure have been evaluated for effectiveness within
the past 90 days
As a result of the Act and subsequent SEC rules and regulations,
all internal controls and procedures related to financial disclosure
will be required to be fully documented, certified and auditable.
This means that most companies will spend a great deal of time
and money to ensure initial compliance.
Failure to comply with these regulations will
result in forced public disclosures, which may lower shareholder
confidence and tarnish the company’s brand. So compliance
is not only a matter of the law, but critical to the protection
of the company’s brand and value in the marketplace.
Compliance is not easy. For many organizations,
Sarbanes-Oxley will consume a great deal of time and budget. Furthermore,
legislation will continue to evolve over time, creating new compliance
requirements that demand constant corporate attention and incur
additional resources.
For more information on the Act and its consequences, see OpenPages'
Sarbanes-Oxley Act
Resource Center. This site will help keep our customers and
partners up to date on the latest developments and commentary
on this fundamental change in corporate reporting and disclosure.
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