Criminal penalties for securities fraud was increased to 25 years, by SOX.
Each public company's CEO and CFO must certify financial statements and reports. Personal loans are banned, to executive officers and company directors, with the enactment of SOX. It is also now required to accelerate reporting of insider trading ("H.R. 3763").
In addition, SOX now prohibits insider trading during pension fund blackouts. Compensation and profits for the CEO and CFO must be made public.
Auditor independence is now specifically required. and, American companies must have an internal audit function, that is certified by external auditors. Audit firms are prohibited from providing services, unrelated to their audit work, to clients. One of the most important provisions is an increased accountability, holding CEOs and directors accountable, for crimes of the organization, even if they had no knowledge of the crime. and, lastly, SOX provides provisions to protect corporate whistleblowers ("H.R. 3763"; Collins).
Major Impacts on Accounting Information Systems of SOX:
SOX deems management accountable for the accuracy of their financial reporting, as noted above. Beard and Wen note,
Management is expected to establish, evaluate, monitor, and provide written assessments of internal controls, which include policies and procedures that -- pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and disposition of the assets of the registrant, provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the registrant are being made only in accordance with authorization of management and directors of the registrant; and provide reasonable assurance regarding the prevention or timely detection of any unauthorized acquisition, use, or disposition of the registrant's assets that could have a material effect on the financial statements.
With...
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