The Sarbanes–Oxley Act of 2002 (Pub.L. 107-204, 116 Stat. 745, enacted July 30, 2002), also known as the 'Public Company Accounting Reform and Investor Protection Act' (in the Senate) and 'Corporate and Auditing Accountability and Responsibility Act' (in the House) and commonly called Sarbanes–Oxley, Sarbox or SOX, is a United States federal law enacted on July 30, 2002. It is named after sponsors U.S. Senator Paul Sarbanes (D-MD) and U.S. Representative Michael G. Oxley (R-OH).
The bill was enacted as a reaction to a number of major corporate and accounting scandals including those affecting Enron, Tyco International, Adelphia, Peregrine Systems and WorldCom. These scandals, which cost investors billions of dollars when the share prices of affected companies collapsed, shook public confidence in the nation's securities markets.
The legislation set new or enhanced standards for all U.S. public company boards, management and public accounting firms. It does not apply to privately held companies. The act contains 11 titles, or sections, ranging from additional corporate board responsibilities to criminal penalties, and requires the Securities and Exchange Commission (SEC) to implement rulings on requirements to comply with the new law. Harvey Pitt, the 26th chairman of the Securities and Exchange Commission (SEC), led the SEC in the adoption of dozens of rules to implement the Sarbanes–Oxley Act. It created a new, quasi-public agency, the Public Company Accounting Oversight Board, or PCAOB, charged with overseeing, regulating, inspecting and disciplining accounting firms in their roles as auditors of public companies. The act also covers issues such as auditor independence, corporate governance, internal control assessment, and enhanced financial disclosure.
The act was approved by the House by a vote of 423–3 and by the Senate 99–0. Former President George W. Bush signed it into law, stating it included "the most far-reaching reforms of American business practices since the time of Franklin D. Roosevelt."
See our detailed overview for public companies via this link here.
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PETALUMA, Calif. - August 11, 2010 - Vibato announces the completion of a recent process reengineering project for iMergent, Inc. (AMEX: IIG), a leading provider of proprietary e-commerce software platforms and portfolio services with multiple subsidiaries. iMergent engaged Vibato to reengineer their internal control infrastructure, implement best-practice controls, and provide a fully-integrated testing environment. Vibato implemented a high level risk assessment, six process control cycles and a segregation of duties analysis to give iMergent an improved internal control environment for their 2011 fiscal year, ready for testing work, and reviewed the transition for completeness and accuracy with their external auditors. The process was completed in four days, with active participation by iMergent’s finance organization.
“We wanted a revamp of our internal control environment with a focus on controls reduction and an integrated environment by having more direct and precise controls. We were very impressed with the efficiency and scalability of Vibato’s approach, especially considering our business complexity,” said Jonathan Erickson, Chief Financial Officer of iMergent, Inc. “The significant reduction in controls from 339 down to 107, combined with the integrated testing capabilities, will allow us to be more efficient in our processes and testing. This is a great example of Vibato’s value-driven focus and commitment to customer success.”
“Our tools are designed specifically for this type of implementation project, even for complexities in such areas as software revenue recognition” said Bill Bockwoldt, Chief Executive Officer of Vibato. “I believe our success with iMergent is a clear indication that our unique approach to managing internal controls for financial reporting continues to position us as the most cost-effective compliance provider in this area today.”
iMergent, Inc. (AMEX: IIG) provides proprietary e-commerce software platforms and portfolio services, through their StoresOnline and Crexendo subsidiaries, including web design and development, custom programming, SEO services and internet marketing and training to entrepreneurs and businesses, enabling them to sell and market their products or services over the Internet. For more information, please visit www.imergentinc.com.
Vibato, LLC is dedicated to providing the most cost-effective compliance solutions available. Our mission is to help you reduce audit and compliance fees, improve financial transparency and run your business more efficiently.
Interesting article on User Developed Applications (UDAs). This could also apply to spreadsheets used for internal controls work, especially if they are distributed across departments and not centralized. Applications are typically developed for expense calculation and tracking (e.g. stock comp expense) as well as financial analysis. We try to take an approach that these types of tools should have permission control and be stored in documented locations where appropriate review and updating can be performed. It makes audit-related work much easier in the end!
"Internal Auditors Target Spreadsheets
The practitioners' leading trade group launches a campaign to get better control over spreadsheets and databases created without oversight from IT.
David McCann - CFO.com | US”
Click here to read the full article.
The article below was sent from a dear friend of mine and fellow SOX enthusiast, Clark Keeler, Director, BPM. I find the article to have a significant amount of irony considering it claims that "American business people of a conservative nature have been dreaming about driving a stake through the heart of the Sarbanes-Oxley act ever since the legislation was passed..." It would seem to me that if a person was truly fiscally conservative, they would consider Sarbanes-Oxley to be the prudent choice rather than the radical one. Internal controls require there to be a check point in a business procedure that requires someone other than the preparer of the documentation to verify the accuracy of what was prepared. This verification prevents someone from acting alone when making decisions about shareholder assets (physical assets, capital, intangible assets, etc). I am of the opinion that this double check adds a necessary layer of review considering the potential for fraud, errors, omissions, etc. Considering all that we at Vibato, LLC have found when testing internal controls, this is no longer just opinion but rather, fact. Read more on the article here:
“Two cheers for Sarbanes-Oxley
The Supreme Court gets it right by tweaking, but not overturning, the controversial legislation
Jun 29th 2010
AMERICAN business people of a conservative nature have been dreaming about driving a stake through the heart of the Sarbanes-Oxley act ever since the legislation was passed, back in 2002, in the wake of the Enron, Tyco, WorldCom and Global Crossing scandals. George Bush rightly described the legislation as “the most far-reaching reforms of American business practices since the time of Franklin D. Roosevelt”. But to its critics it is far-reaching in the wrong direction. The American Enterprise Institute, a right-wing think-tank, has dismissed Sarbox as a “colossal failure”. Ron Paul, a Texan libertarian, has argued that it puts America at a competitive disadvantage. The Wall Street Journal thunders that it has “imposed hundreds of billions of dollars in costs on business with no noticeable decline in financial scandals”. Newt Gingrich has urged Congress, the body that he once dominated, to repeal the act.”
See the full article here.
Vibato is pleased to announce the win of Golden Phoenix Mineral's Sarbanes-Oxley compliance work. Golden Phoenix came as a referral from HJ & Associates out of Salt Lake City, Utah.
Golden Phoenix Minerals, Inc. was formed in 1997 as a publicly traded for-profit corporation. It is headquartered in Sparks, Nevada and trades on the OTCBB under the symbol GPXM. The Company is focused on developing and mining superior high-grade deposits of precious and strategic metals to enhance profitability and return maximum value to its shareholders.
Golden Phoenix had a previous SOX engagement effort with an outcome that did not meet their expectations. This led to the Golden Phoenix team feeling like "SOX is a four-letter word."
Our assessment of Golden Phoenix was that they would benefit from our SOX Basic® toolset, and the referral from their auditors certainly support this idea. We are confident that our robust framework and integrated testing will exceed our client’s expectations for fully documenting their control infrastructure and providing comprehensive testing of their internal controls.
We completed their Risk Assessment and Internal Controls Documentation effort yesterday (in one day) and we were also able to gather testing documentation while we were there. According to their Accounting Manager, "SOX is no longer a four-letter word" and she feels strongly that the implementation will allow her to be more efficient with her monthly activities and she could see a direct correlation with reduced external audit effort. As with all of our clients, we monitor the return on investment and we plan to publish a case study so look for it after their year-end audit!
We look forward to working more with this great client!!
Here is an article I thought out readers would find interesting that details the Wall Street Reform and the effects it will have on various industries. There is also a video of Obama discussing the topic of the Wall Street Reform:
http://www.msnbc.msn.com/id/37924105/ns/business-us_business
I read an interesting Press Release this morning, titled "House Approves Wall Street Reform Package." To read the press release, follow the link below:
I read this press release this morning and feel that our readers will find it interesting. It details the Center for Audit Quality's reaction to the Supreme Court's PCAOB Decision:
http://www.thecaq.org/newsroom/release_06282010.htm
For those of you who are curious, the below article from TNBankers.org gives descriptions of some of the key provisions of the Reform Bill that is currently being worked on: |
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I read a press release titled "Decision in Free Enterprise Fund v. PCAOB". To read the full press release, click on the link below:
http://pcaobus.org/News/Releases/Pages/06282010_SupremeCourtDecision.aspx