Sarbanes Oxley (SOX) was sponsored by Sen. Paul Sarbanes (D-Md.) and Rep. Michael Oxley (R-Ohio) in the 107th U.S. Congress, Second Session and was signed into U.S. Law by President George W. Bush on July 30, 2002. It is technically called the Public Company Accounting Reform and Investor Protection Act of 2002
SOX rules apply to publicly traded firms that list their stock on any U.S.-based financial exchange. That means businesses domiciled in the United States as well as any global company that is listed on one of the three main exchanges (NYSE, AMEX, and NASDAQ) or a regional exchange in Chicago or Kansas City. PMP® test moment, remember regulations are legally binding, crafted and promulgated by governments versus standards that offer best practice such as ISO9000 (Quality) or ISO 17799 (IT Control).
As will be discussed in the final article, it also impacts private, public sector and non-profit organizations due to their supply chain relationships with publicly held companies.
A quick SOX overview.
There are eleven titles of SOX, each one with several sections. Of specific relevance to project managers are the following five sections. Future articles will dissect how each section referenced below impacts organizations and project managers. For the complete SOX Act go to http://www.sec.gov/about/laws/soa2002.pdf
· Title III – Corporate Responsibility
· Title IV Enhanced Financial Disclosures:
- The annual internal control report shall state responsibility of management for establishing and maintaining an adequate internal control structure.
- Each registered public accounting firm that issues the audit report, shall attest to, and report on, the assessment of the issuer.
· Title VIII – Corporate and Criminal Fraud Accountability
Title IX – White Collar Crime Enhancements
o Section 906 – Corporate responsibility for financial reports: this establishes criminal penalties for false corporate reporting — see golf outings at federal minimum prisons, no caddies or hair dryers allowed.