Sarbanes-Oxley Compliance

Minggu pertama saya sempat membahas driver pengelolaan bisnis proses di banyak perusahaan, salah satunya SOX. Artikel ini saya temukan yang cukup menjelaskan keterkaitan issue ini dengan materi SI454.

Enron and WorldCom, at one time these companies dominated their respective industries. Lately, however, they are known more for accounting scandals than for the products and services that they produced.

As a result of this malfeasance, the federal government decided to step in and try to restore investor confidence while protecting the general public from further corporate mismanagement. Spearheaded by the co-chairs of the House-Senate conference committee on corporate accounting reform, Senator Paul Sarbanes and Representative Michael Oxley, the Public Company Accounting Reform and Investor Protection Act was signed into law by President George W. Bush in July 2003. The act is better known as Sarbanes-Oxley, or by the acronym SOX.

The Sarbanes-Oxley Act emphasizes accountability for corporate officers, requires independent boards of directors for public companies, and mandates a wide-sweeping accounting framework for all public companies doing business in the United States. This includes requiring disclosures on internal controls, ethics codes and the makeup of their annual reporting audit committees. In addition, all wholly-owned subsidiaries and all publicly traded non-US based companies face Sarbanes-Oxley compliance. Finally, private companies that are preparing for their Initial Public Offering (IPO) must also comply with certain SOX provisions.

Public companies with a market capitalization of $75 million or more were required to be in compliance with Section 404 for the fiscal year ending on, or after, June 15, 2004. Smaller companies had to be incompliance for the fiscal year ending on, or after, April 15, 2005.

Business processes form the foundation for all organizations, and as such, are impacted by Sarbanes-Oxley compliance requirements. Solid business processes allow an organization to maximize profitability by providing employees with streamlined and efficient processes that allow them to excel in their jobs. This is especially true in organizations that have not kept up with the Joneses and scrapped their manual processes for more efficient electronic ones.

Sarbanes-Oxley compliance forces all organizations to review their business processes and ensure that they meet the compliance standards set forth in the Act. This can include, but is not limited to, data acquisition and archival, document management, data security, financial accounting practices, and shareholder reporting functions.

As you can see, nearly all business processes in the organization are touched when determining Sarbanes-Oxley compliance. This can be a good thing, however. By reviewing the organization’s business processes, you can not only ensure Sarbanes-Oxley compliance, but you can also improve these processes to increase efficiency and maximize profitability.

Although reviewing all of these processes may seem overwhelming, the end result will prove worth the effort.