1. Presented By
Syed Kashif Shah (Group Leader)
Group Members
Kashif Ali , M.Hamid
Waqar Khan
BBA 7th
2. Sarbanes-Oxley Act 2002
Nick Name(s)=Sabanes-Oxley, Sarbox, SOX
Enacted By The 107th United States Congress
Passed The House on April 24, 2002 Votes 334-90
Passed The Senate on July 15, 2002
Signed Into law by President George W.Bush on July 30, 2002
3. Major Elements
1.Public Company Accounting Oversight Board (PCAOB)
2.Auditor Independence
3.Corporate Responsibility
4.Enhanced Financial Disclosures
5.Analyst Conflicts
6.Commission Resources and Authority
7.Studies and Reports
8.Corporate and Criminal Fraud Accountability
9.White Collar Crime Penalty Enhancement
10.Corporate Tax Return
11.Corporate Fraud Accountability
4. 1.Public Company Accounting
Oversight Board (PCAOB)
Title 1
Provide Independent Public Accounting Firms Audit Services
(Auditors)
register public accounting firms that prepare audit reports
for issuers.
set auditing, quality control, ethics, independence and other
standards relating to the preparation of audit reports of
issuers
set auditing, quality control, ethics, independence and other
standards relating to the preparation of audit reports of
issuers
5. 2.Auditor Independence
Title II
Establishes Standards for External Auditor Independence
Address new Auditor Approval Requirements
Auditor Reporting Requirements
Restricts Auditing firms from Providing non-Audit services
(e.g Consulting) for same clients
6. 3.Corporate Responsibility
Title III
Mandates That Senior Executives Take Responsibility
for Accuracy & Completeness of CFR’s.
Interaction of External Auditors & Corporate Audit
Committee
Penalties for Non-Compliance
7. 4.Enhanced Financial Disclosures
Title IV
It describe Enhanced Reporting Requirements
Off-balance Sheet Transactions
Pro-forma Figures
Stock Transactions
It Requires Timely Reporting of Material in Financial
Condition
8. 5.Analyst Conflicts of Interest
Title V
It Includes Measures & Designed To help Restore
Investor
It defines Codes of Conduct for Securities analysts
Disclosure of Knowable Things
To Facilitate Investor
9. 6.Commission Resources And
Authority
Title VI
Defines Practices to restore Investor Confidence
Securities Analysts.
It also Defines The SEC’s Authority
To Stop Those Professionals Who Which don't follow
the Predefine Conditions
Broker
Dealer
Advisor
10. 7.Studies And Reports
Requires The Comptroller General And SEC to
Perform Various Studies and Report Their Findings
Studies And Reports Include The Effects of
Consolidation of Public Accounting firms
The Role of Credit Rating Agencies In the Operation of
Securities Markets
Securities Violations and enforcement Actions
11. 8.Corporate And Criminal Fraud
Accountability
Title VIII
It Refers To The “Corporate and Criminal Fraud
Accountability Act”
It Describes Specific Criminal Penalties for
Manipulation, Destruction of Financial Records
OR Other Interference With Investigations, While
Providing Certain Protections for Whistle-Blowers
12. 9.White Collar Crime Penalty
Enhancement
Title IX
This Section is Also Called “White Collar Crime
Penalty Enhancement Act”.
This Section Increases The Criminal Penalties
associated with White Collar Crimes & Conspiracies
It Recommends & Specifically adds Failure to Certify
Corporate Reports as a Criminal Offense
14. 11.Corporate Fraud Accountability
Title IX
It Identifies Corporate Fraud & Records Tampering as
Criminal Offense And Joins those Offenses To Specific
Penalties
The SEC To Restore To Temporarily Freezing
Transactions or Payments That have been deemed
“Large” or “unusual”
16. Sox Section 302:Disclosure of
Controls
The Act Mandates a set of Internal Procedures
Designed to ensure Accurate financial Disclosure
The Signing officers Must Certify that they are
“Responsible for Establishing & Maintaining Internal
Controls” & “Have Designed such controls to ensure
that material Information relating to the Company &
its Consolidated Subsidiaries is made known to such
officers by others within those entities, Particularly
during the period in which the Periodic Reports are
Being Prepared
External Auditors Opinion
17. Sox Section 401:Disclosures In Periodic
Reports (Off-Balance Sheet Items)
All materials of of-Balance Sheet Items must be
Disclose
To Follow the Accounting Principles
18. Sox Section 404:Assessment of
Internal Control
Issuers are required to publish information in their
annual reports concerning the scope and adequacy of
the internal control.
structure and procedures for financial reporting.
This statement shall also assess the effectiveness of
such internal controls and procedures.
The registered accounting firm shall, in the same
report, attest to and report on the assessment on the
effectiveness of the internal control structure and
procedures for financial reporting.
19. Sox 409:Enhanced Financial
Disclosures
Issuers are required to disclose to the public, on an
urgent basis, information on material changes in their
financial condition or operations.
These disclosures are to be presented in terms that are
easy to understand supported by trend and qualitative
information of graphic presentations as appropriate.
20. Sox Section 802:Criminal Penalties for
Influencing US Agency
Investigation/Proper Administration
This section imposes penalties of fines and/or up to 20
years imprisonment for destroying, mutilating,
concealing, falsifying records, documents or tangible
objects with the intent to obstruct, impede or
influence a legal investigation.
This section also imposes penalties of fines and/or
imprisonment up to 10 years.
21. Sox Section 902:Criminal Penalties for
CEO/CFO Financial Statement
Certification
Certification of Periodic Reports
When any Executive (CEO/CFO) Certify any
Discomfort Statements……
Fines
$1000000 (1 Million $)
$5000000 (5 Million $)
Imprisoned 20 years
$5000000 (5 Million $) Imprisoned 20 Years=Both
