There are many requirements on the part of a corporation to live up to its obligations under both federal and state statutes. Among these requirements is the requirement that the corporation provide accurate and truthful financial statements under the Sarbanes Oxley Act of 2002. In some situations, when the financial statements have come under question by appropriate governmental authorities, an audit must be done of the corporation’s financial records. When this occurs, it is important to not panic and understand what is required of your corporation.
The Sarbanes Oxley Act, or SOX, requires all financial reports to include an Internal Controls Report. The purpose of this report is to show that a company’s financial data is accurate and adequate controls are in place. It proves that there is no manipulation on the part of the corporation and that the corporation is honest and sincere in its financial reporting. Additionally, a corporation must provide year-end financial disclosure reports. A SOX auditor reviews the controls, policies, and procedures in place.
SOX auditing requires that internal controls can be audited using a specific control framework. SOX provides the COBIT framework as an example of a permissible framework. Direct from SOX’s website, they require log collection and monitoring systems provide an audit trail of all access and activity to sensitive business information. It is clear SOX is concerned not just with internal manipulation, but also external, uncontrolled manipulations.
When running a corporation, there are many requirements in order to avoid liability. This includes ensuring the proper auditing controls are in place, as well as proper financial reporting. This is a subject not to be taken lately. Consulting with the right legal team can ensure you have the proper reporting systems in place. Call the Trembly Law Firm at (305) 431-5678 today to schedule your consultation.