Sarbanes Oxley Compliance

The world of high finance has many rules and regulations to follow. In July of 2002 the Sarbanes Oxley (SOX) Section 402 legislation added enhanced conflict of interest provisions and disclosures which amended the Securities and Exchange Act, Section 13. Among other restrictions, the new legislation prohibits loans or extensions of credit by publicly traded companies to insiders such as company executives.

These include directors and executive officers of the companies. Another aspect of this legislation is that the criminal penalties from the Securities Exchange Act, section 13 now apply to violations of section 402 of SOX. Enforcement actions have already been brought against offending companies. 

Every large publicly traded company needs very good legal and accounting services to keep them in compliance with Sarbanes Oxley Section 402 and the rest of the SOX legislation. The legislation is very complicated and open to various interpretations. There are interpretive issues for executive compensation surrounding the section 402 loan prohibitions.

With the criminal penalties that are now attached, caution is more than an option. Reading the legislation involved, doesn't mean it is correctly understood. Financial institutions are under a lot of public scrutiny in this economy, and need to protect themselves from any appearance of wrong-doing, as well as insuring compliance with all of the SOX regulations.

Because of this very important and far reaching legislation, there are accounting and legal firms that specialize in Sarbanes Oxley Section 402 compliance as well as the rest of the SOX regulations, restrictions and other related government legislation. These companies have studied all the legislation extensively so they can offer the best advice possible to the publicly traded companies who make up their clientele. These consulting firms are worth their fees if they insure SOX compliance and avoid financial penalties and criminal charges that may be leveled on companies in violation of this legislation.

A good web-based software program to collect needed information from all parts of a company and compile it in correct form for compliance and reporting is essential. The consulting firm a company may be using needs the information from the company to do its job. The company's officers need to know if the institution is in compliance with Sarbanes Oxley Section 402 and the rest of the SOX restrictions and reporting requirements. A good software program will make needed information available to those in a company that need it. Executives will be able to retrieve information quickly from all parts of the company when required.

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