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Sarbanes Oxley (SOX) & ITGC Controls:
The Sarbanes-Oxley Act of 2002 has been drafted by Senator
Paul Sarbanes and Congressman Michael G. Oxley in response
to number of major corporate and accounting scandals including
Enron and WorldCom.
This Congressional act instituted sweeping changes for
accounting in US public companies including their wholly-owned
subsidiaries, and private companies that are preparing for their
initial public offering (IPO) in order to prevent the misuse of
finances and for protection of shareholders.
The act requires significant controls so that financial data is
sound. Companies must comply with these laws as a SEC
(Securities and Exchange Commission) registrant.
The compliance requires documenting internal controls, annual
control testing by the Internal Audit Department and an External
Auditor.
If a company is non SOX compliant it may receive unfavorable
press, loss of brand equity, and a potential negative impact on
market capitalization and market share. The act also has
provision for criminal and civil penalties.
References:
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