Make The Sarbanes Oxley Act Cheaper To Comply By

Whether you are a US company, or just a company with links back to the US, you may be required to know about the Sarbanes Oxley act. If you are a American company and have never have heard of the act, then you have already learnt something new. It’s a United States law.

The Sarbanes Oxley act is an act that was signed into US law in 2002. The act was designed to try and stop companies doing what Enron and Worldcom did. Both of these companies were found to have been working using fraud deals for a number of years. At that time it was not required for the companies to show their books to the government.

What the act does is it makes sure that companies are run legitinately and if it’s found that they are not, it holds the big guns responsible.

The act forces the Chief Executive Officers and the Chief Financial Officers to sign the books for the business. They have to sign the books to gaurentee they are not misrepresented and they match the earnings of the company.

If this is not done or it turns out the records are false, there are some hard punishments that come down on the Chief Officers of the company.

Like I said at the beginning, you may not have to abide by the act. Only companyies within the US, UK or Europe and have listings in the US stock exchange are required to follow the act. You should also be required to follow the act if your company is based in Europe and it;s a subsidiary of a US company.

Some companies find the Sarbanes Oxley act to be a real pain. Because the company is required to report every single business transaction, even the sale and purchase of company assets. This is where people have the problem because all the company’s fixed assets must before recorded.

The process of fixed asset accounting can be expensive and take time. If you attempt to do the job yourself, based on the size of your company, it can take a number of months and just cause more problems. The most efficient way to get a complete audit of your assets is by hiring an external asset management company to do the job.

Unfortunately, it’s still not a cheap process to do. However, many asset management companies do offer services that they can add to your assets to make it easier and cheaper to audit in the future. Many of the companies also offer Sarbanes Oxley compliance software which will make the job even easier for you.

Hopefully you will now know what the Sarbanes Oxley act is and how you have to abide by it. You most likely won’t like the act, but you can blame it on Enron and Worldcom.

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