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Sarbanes-Oxley Act Services 
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We can assist with the documentation of the procedures, processes, controls and systems surrounding the preparation of financial statements thus helping the company comply with sections 302 and 404 of the Sarbanes-Oxley Act.  A brief summary of our understanding of the Act follows at the bottom.

 

Potential Impact of the Act Upon Information Technology & Business Processes

Clearly, this Act only affects public companies.  Secondly, it creates a process and procedures review and documentation requirement upon the Company.  The two areas of major interest that we can assist with are as follows:

 

Section 302 Compliance:  Documentation of internal company processes and procedures demonstrating and insuring that all information required to be disclosed is disclosed.  This would be the basis upon which the CEO and CFO would base their certification, i.e. that the financial statements and accompanying footnotes are correct and fully complete.

 

 Section 404 Compliance:  These rules are not yet final, however the external auditor has to annually attest to managementís assessment of the effectiveness of the companyís internal controls and procedures for financial reporting.  Accordingly, documentation of internal controls and procedures appear to be a key requirement upon which management, and the external auditors, can base their assessment.

 

Below is a brief summary of the Act.

 

"Generalized Summary of Sarbanes-Oxley Act (Public Law 107-204)" 

Further details can be obtained from:  http://www.aicpa.org/info/sarbanes_oxley_summary.htm

1) The Act was signed into law on July 30, 2002. The act only impacts public (SEC registered) companies and the CPA firms which service them.  The details of the act are still in the process of being fully defined.

2) It created the five member (each for a five year term) Public Company Accounting Oversight Board (reporting to the SEC) which will register, set standards for, verify compliance, etc. of all public accounting firms.  The Board shall be supported by registration "fees" charged to all public accounting firms.

3) It requires the CEO and CFO to certify (on a quarterly basis) the appropriateness of the financial reporting and for managementís responsibility for establishing and maintaining an adequate internal control structure and procedures for financial reportingThese requirements and responsibilities are defined under section 302 and 404, these rules may require the establishment of processes to ensure or be able to prove that all information required to be disclosed (both financial and non-financial) is recorded, processed, summarized and reported timely under SEC rules.  These certifications apply to the consolidated entity, and hence include all subsidiaries, including those acquired during the quarterly attestation period.

4) It bolsters the independence requirements and rules for the Companyís Board of Directors and its Audit Committee (e.g. board member can only receive compensation for serving on the board and they cannot provide external services or consulting, etc.)

5) It defines rules and responsibilities for the company's audit committee, e.g.: appointment & compensation of the external accountants, establishment of procedures for the "receipt, retention, and treatment of complaints" received by the company regarding accounting, internal controls, and auditing.

6) It bolsters the external auditor independence rulese.g. mandated five year audit partner rotation, prohibits the offering of "non-audit" services (without prior approval) to publicly traded clients (sample of prohibited services include: bookkeeping, HR services, IT services, Legal services, Valuation & Appraisal, etc. ), Key person rules, i.e. CEO or CFO or Chief Accounting Person cannot have been employed by the external accounting firm one year prior to the audit, others..

7) It enhances other rules, e.g.: auditors must retain work papers for five years, penalty enhancements (e.g. mail and wire fraud increased from 5 to 10 years), etc..

 

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Last modified: November 09, 2010