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The House had passed the Oxley bill in April 2002, which was related to the accountability, responsibility and transparency of stating financial status of the company. At the same time Senator Paul Sarbanes had another proposal on the similar lines. He presented the bill to the Senate Banking Committee which passed the bill with a majority.
Thereafter both the proposals made by House Representative Oxley and Senator Paul Sarbanes were reconciled to be formed in to one act, which is now popularly known as the Sarbanes Oxley Act. Sarbanes Oxley came into force mainly due to the financial scandals committed by corporate giants like Enron, WorldCom, etc. Since then the Sarbanes Oxley act had been the most important piece of legislation which seriously affects the corporate governance, financial disclosures and total accounting pattern in the companies.
After the Sarbanes Oxley act came into force, accounting system and financial statements disclosed by the companies made tremendous progress. This improvement has been possible due to rigorous requirements stated in the Sarbanes Oxley act. Due to this improvement it helps to protect investor confidence in the companies and the US legislature as well. Moreover, it also helps in establishing a public company accounting oversight board, auditor independence, and corporate responsibility and enhanced financial disclosures.
Most companies focus their attention on Sarbanes Oxley work in thirteen specific areas. These 13 areas are the ones where most of the financial impact is felt. Section 404 stated in the Sarbanes Oxley act is the ones that has caused the most concern in the financial sector according to which requires the corporate body to enhance stricter controls over the financial reporting by internal accounting personnel.
It has now become mandatory for companies to have Sarbanes Oxley compliance. The companies need to meet Sarbanes Oxley compliance deadlines. The most important ones are that firstly, the companies should meet the financial reporting and certifications mandates for statements filed after 15th November for any particular financial year. This deadline was amended from June 15th deadline stated earlier. Secondly, the Sarbanes Oxley compliance states that the smaller companies and foreign companies should meet the mandates for statements filed after 15th July. This deadline was amended from the earlier deadline of April 15th.
Sarbanes Oxley had separately drafted the act for the financial accounting but after the financial scams from corporate giants like Enron and WorldCam, draft for both the act were passed jointly by the US senate and the House unanimously and equivocally. Thus the Sarbanes Oxley act was organized into eleven titles out of which sections 302, 404, 401, 409, 802 and 906 are the most significant ones as they refer to the compliance and internal control for any financial reporting from a company.
Sarbanes Oxley software is also available for those who want to prepare their statements as per the Sarbanes Oxley act. This can also be downloaded from the Internet. The complete toolkit is accompanied by guides, presentations and implementation checklists. The checklists in the Sarbanes Oxley toolkit are provided in MS word format such that it can be easily edited.