Sarbanes Oxley Compliance

The Truth About Sarbanes Oxley Section 302

After the public 2001 collapse of ENRON and 2002 disgrace of World-Com, a number of laws and rules had to be developed and enforeced to create solutions to these types of problems. Sarbanes Oxley Section 302, was established as an accounting system for the Sarbanes Oxley Section 301.

This company watched its stock fall from $90 per share on the New York Stock Exchange to a measly $0.10 in 2001. The Sarbanes Oxley Section 301 has been implemented as an addition to the Sarbanes Oxley Act of 2002 in an attempt to eliminate the fraudulent auditing practices and opaque financial disclosures that eventually caused this painful loss to so many.

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The Sarbanes Oxley Act of 2002, or SOX as it is sometimes referred to, policy was put in place through Section 301 for an independent audit committee to oversee all financial dealings within these corporations.

Section 302 describes the necessary forms and paper work that needs to be in place and submitted to maintain compliance with the new laws and rules set forth.

Each corporation is required to file certain reports at varying times within given guidelines, under Sarbanes Oxley Section 302. The CEO and CFO of each corporation are required to sign a statement assuring the truth and accuracy of the filed reports.

If one intentionally and knowingly violates these rules, then it is punishable by law.

By signing these reports, the signer is stating he or she has reviewed these reports. In addition, this signature provides assurance that the statements and information within the accounting audit reports are true and nothing has been omitted. Moreover, that this is a transparent report of the corporations financial status.

Officers that are required to sign and choose to do this are stating that they are responsible for all internal controls that have put in place, are confident and have assessed that these said controls are effective.

In addition, the creation of internal controls must be in place that assures these officers that the appropriate persons disclose all pertinent data of the corporation to them. They are also required to supply a written report on their evaluations and findings of these controls.

An independent audit report is also required on the effectiveness of said internal controls.

Furthermore, by signing, these officers are conveying the fact that they have made clear and available to the corporations independent auditors all of the necessary information needed to conduct a fair and accurate accounting of the security of the corporations financial standings.

Any negative information in regards to the corporation must have also been disclosed for the auditors to create a fair assessment of the operation. Again, any fraud or intentional violations of these rules can result in punishment by law.

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