Sarbanes-Oxley (SOX) - Business Readiness White Paper from Peracto Solutions IThound

Sarbanes-Oxley (SOX) - Business Readiness White Paper
by Peracto Solutions
Published:October 2007
Format: Portable Document Format (.pdf)
Length: 18 pages
Overview

The Sarbanes-Oxley Act (officially known as the US Public Company Accounting Reform and Investor Protection Act of 2002) -- came into law in 2002. The need for reform became apparent after a series of accounting scandals involving large, publicly offered companies. Legislators wrote the Act to restore investor confidence in the integrity of US capital markets in the wake of these events by implementing higher regulatory standards upon the quality and integrity of the information itself and assigning responsibility to those responsible for reporting accounting and financial information.

Simultaneously, other initiatives were taken to improve corporate governance. These include the Basel II initiative, which will impose a new operational risk management framework on financial institutions. The International Accounting Standards (IAS) body is also developing a number of new and revised standards for better reporting from an international perspective.

The possible benefits of these changes and the implementation of Sarbanes-Oxley are significant. Organizations will have the opportunity to re-evaluate business processes, including financial reporting processes, in order to identify the most efficient mode of operation. By reassessing their business processes, organizations can obtain new competitive advantages if they can identify and exploit new, more efficient modes of operation.

These new modes of operation can ultimately provide organizations with more stable bases for current business operations and for future business development. These new regulations also provide organizations with the opportunity to increase transparency for investors, employees and the public, which can positively influence an organization’s public image and strengthen their trustworthiness for investors still wary after the recent corporate scandals. These changes also give those individuals who are personally responsible for reporting valid, reliable, and accurate financial information even greater responsibility. This provides another guarantee to investors, employees and the public that information stated in reports and statements is correct, and that the given organization has not provided fraudulent or inaccurate information, thereby giving the organization another means of reassuring investors of their intentions.

Sarbanes-Oxley, IAS and other initiatives all play an important role in improving modern day corporate governance. However, with regard to computerized accounting and reporting, these changes also place a heavy burden on the technological infrastructure of many organizations. Microsoft Dynamics NAV, a business management software solution that is especially suited for subsidiaries of larger organizations, provides a range of features, tools and services to help support small to medium-sized businesses in their efforts to comply with Sarbanes-Oxley.

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