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Sarbanes Oxley and Corporate Auditing
A corporate audit is an examination of financial or operational procedures at a corporation.
Audits may be conducted by an internal or external corporate auditing team, and they can serve a variety of functions.
While many people think of audits by tax authorities when they hear the word “audit,” corporate audits are not just about taxes. Auditing is designed to confirm that companies are operating within the law, and that their stated ethical standards are upheld by their practices.
In the financial sense, a corporate audit involves detailed inspection of financial accounts and financial practices. Auditors look for financial irregularities which might be signs of evasion, embezzling, and other illegal activities.
For some financial audits, the auditors may also be concerned with how to help the company operate more efficiently and effectively, looking for ways in which the company can cut costs and improve performance. Others may be more interested in making sure that the company’s financial situation is accurately represented.
For publicly traded companies, financial audits and disclosures of financial information are required to protect shareholders and members of the general public. The most recent audit results and financial filings must be made available to those who ask. Auditing is designed to act in a regulatory capacity, keeping companies fiscally responsible and honest about their financial practices and economic situation.
What Does Sarbanes-Oxley Have to Do with Me?
What do Enron, Worldcom, Qwest and Anytown Community Bank have in common? The answer is that each can be expected to feel the impact of the Sarbanes–Oxley Act of 2002, regardless of whether it is a publicly-traded company.
US Congress’s response to corporate fraud, greed, and slip-shod accounting practices was quick in election year 2002. The Sarbanes-Oxley Act of 2002 passed by Congress on July 30, 2002 was Congress’s response to the headlines appearing daily in the business sections of newspapers chronicling corporate mismanagement and SEC laxness. The response was not unlike one with which all bankers are familiar.
What companies need to comply with Sarbanes-Oxley?
All publicly-traded companies in the United States, including all wholly-owned subsidiaries, and all publicly-traded non-US companies doing in business in the US are effected.
In addition, any private companies that are preparing for their initial public offering (IPO) may also need to comply with certain provisions of Sarbanes-Oxley
