| Sarbanes Oxley Act of 2002 was passed after a | | | | internal controls and financial measures also helps fulfill |
| public demand which grew due to the scandalous | | | | the purpose of Sarbanes Oxley Act. |
| exposure of several high level financial scandals in | | | | An increased set of responsibilities delegated to the |
| which a number of big corporate giants were involved. | | | | audit committee also help fulfill the purpose of |
| A number of Fortune 500 companies were found | | | | Sarbanes Oxley Act. Similarly in order to fulfill the |
| involved in these scandals and the investor confidence, | | | | requirements of the Sarbanes Oxley Act, the public |
| had hit rock bottom. The purpose of Sarbanes Oxley | | | | auditors are put under increased regulatory control of |
| Act was to empower the Securities and Exchange | | | | the Securities and Exchange Commission which has |
| Commission of the U.S. so that it can keep an eye on | | | | newly formed the Public Company Accounting |
| the corporate governance and the investor's | | | | Oversight Board for this purpose. You can read more |
| confidence in the market shall be reinstated. | | | | free advice on Sarbanes Oxley at |
| Despite overflowing amounts of legalese, there are | | | | Company CEO and CFO |
| two major purposes of the Sarbanes Oxley Act. They | | | | A number of measures related to company CEO and |
| are to ensure transparency and accountability by | | | | CFO as well as financial affairs of the company have |
| implementation of Sarbanes oxley compliance. These | | | | been delegated to fulfill the purpose of purpose of |
| purposes are to be fulfilled at the pain of fine or | | | | Sarbanes Oxley Act. The company CEO and CFO |
| punishment or both. President Bush informed that no | | | | would be required to publicly certify the financial |
| law of such significance to businesses has been | | | | reports and data related internal controls. Similarly, |
| signed since the presidency of Franklin D. Roosevelt in | | | | insider transactions must be regulated like loans to |
| the U.S. which reflected the significance of this act. | | | | directors and executive officers, transactions which |
| Main Purpose | | | | involve company securities need to be reported in two |
| The main purpose of Sarbanes Oxley Act is to ensure | | | | business day and CEO and CFO to be responsible for |
| that the corporate sector works with transparency | | | | compensation to company in case their misconduct |
| and provides full disclosure of information as and when | | | | leads company in trouble. |
| required. The transparency purpose of Sarbanes | | | | The purpose of the Sarbanes Oxley Act was to |
| Oxley Act is fulfilled by ensuring real time disclosure of | | | | protect investors from the possibility of fraudulent |
| information, the adherence to guidelines of the | | | | accounting activities by corporations. The corporations |
| Generally Accepted Accounting practices, full financial | | | | can deploy Sarbanes Oxley software solutions to |
| details being made available of all the transactions not | | | | ensure compliance. To bring about such transparency, |
| mentioned in balance sheet. This purpose of Sarbanes | | | | the law will have to be regularly amended by the |
| Oxley Act is also fulfilled by an expanded disclosure of | | | | Congress so that it meets the requirements of the |
| financial and non financial control measures in force in | | | | hour. |
| every company. Similarly, public certification of these | | | | |