The Sarbanes-Oxley Act Explained By Alan Weiler The purpose of the Sarbanes-Oxley Act is to help ensure that the financial markets are based on sound financial reports-- that to the extent humanly possible, the reports are a good faith picture of the financial state of a corporation. The Sarbanes-Oxley Act was signed into law on July 30, 2002. In this book, you will learn: - The context in which this Act was passed-- what problems it is intended to solve - How the Act will help ensure that corporate financial reports are accurate - Some steps corporations will take to meet the provisions set forth in the Act - How the Act has been interpreted in the year after its passage Approximately 23,335 words. Includes exercises and quick quizzes. ABOUT THE SARBANES-OXLEY ACT Congress took this action because so many individuals and organizations are dependent on the integrity of the U.S. stock market. Millions of people in the U.S.--and indeed the world--are making investment decisions based on what they believe a share of stock is worth. In the years leading up to the Act's passage, some highly publicized cases of misrepresentation caused serious financial losses to individuals and investment funds. The Sarbanes-Oxley Act is designed to protect the public from willful lies, deceit and misrepresentations. With this protection, investors can be more sure that their success or failure in the stock market will be based on their own choices and not on faulty information. TABLE OF CONTENTS Main Menu Introduction The Context of the Act Checks and Balances The Act Title by Title The SEC Final Rules Looking Ahead Appendix Section 1 Why this Act? Why Now? The Business Environment Exercise Section 2 The Players Exercise -Violations vs. Poor Decisions Major Themes in the Act Section 3 How to Read an Act Oversight Board Auditor Independence Corporate Responsibility Check Your Knowledge Enhanced Financial Disclosures Analyst Conflicts of Interest Commission Resources Check Your Knowledge Studies and Reports Criminal Fraud White-Collar Crime Corporate Tax Returns Corporate Fraud Check Your Knowledge Section 4 Section 201 - Services Outside the Scope of Auditors Section 301 - Public Company Audit Committees Section 401 - Disclosures in Periodic Reports Section 404 - Management Assessment of Internal Controls Section 802 - Retention of Records Check Your Knowledge Summary of SEC Actions Section 5 Accounting Rules vs. Principles Conclusion Appendix The SEC Titles and Sections of the Act Summary of Compliance Issues DISCLAIMER The contents of this book are presented for information purposes only and represent the opinions of the author. These materials do not constitute legal or accounting advice. This book is not an exhaustive analysis of the Sarbanes-Oxley Act nor is it a guide to compliance. For accounting or legal advice consult with a qualified accountant or attorney. For advice on compliance with the Sarbanes-Oxley Act, seek professional counsel. REFERENCES The quoted passages in this book are all part of the public record, either as part of the Congressional record, or provided on official web sites hosted by agencies authorized by the federal government. Published by Kallisto Mobile Media A division of Kallisto Productions, Inc. P.O. Box 1147, Fairfax, California 94978
