Sarbanes Oxley

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#1

Does anybody know of a good introductory guide to sarbanes oxley? Every place I’ve found on google seems to either sum it up in a paragraph or be aimed at accountants, so way above my head.

If anyone has a good link I would really appreciate it.

Cheers


#2

I have a pretty good understanding so fire away, but here’s my take:

Sarbanes-Oxley, also known as SARBOX or simple SOX, is a law made in hindsight on the Enror disaster. The purpose of Sarbanes-Oxley is to reduce the risk of fraud inside a company. What it means is that every company must have all it’s internal checks and controls documented in detail, and then an audit firm, like PwC, KPMG or Deloitte, will come and review their Sarbanes-Oxley documentation and check that they are performing the controls and checks the way they said.

Another way of looking at it is that Sarbanes-Oxley has resulted in their being much more work for auditors in recent years, effectively giving audit firms a license to print money. From the client company side, it is an awful lot of red tape which is proving to be restrictive and costly, and it has been suggested that SARBOX has gone too far and the requirement may be reduced in years to come.

Does this help?
Feel free to ask any more questions!

Chris.


#3

I’ve actually got my assessment day tomorrow with PwC and I’m also expecting some questions about the industry.

Regarding the Sarbanes Oxley Act, isn’t there also something to do with auditors being limited to the amount of consulting they are allowed to do if they’re also auditing the firm?

I was also planning to talk about International Financial Reporting Standards (IFRS) though to be honest I know next to nothing about it so any help would be nice. Just I saw it mentioned on the PwC website and was told it’s going to affect the UK soon?

Thanks for any replies!


#4

Look here:
Sarbanes-Oxley Act - WikiJob

With regards to consulting, you’re absolutely right, but this is mostly covered by the APB in the UK. Audit firms are not permitted to offer consulting services to their clients as it is a breach of independance, although they can do in some cases. (For example, PwC audit and PwC consulting are seperate legal entities and there are controls in place to keep things independant).

With regards IFRS, the UK’s accounting system is moving from UK GAAP to IFRS in the coming years. It isn’t a big deal financially- just everybody has to abide by slightly different but largely equivalent rules. The only real hassle is in the changeover. The way things are handled between the two systems are subtly different, but these are technical accounting issues and you would never be expected to know these (even employees will often look these up in a book).

The reason IFRS is being implemented is to allow transparency with accounts from other countries.


#5

Thanks a lot! Well I’ll see how my assessment day goes tomorrow and I may even make a post about my experiences whether the result is good or bad.