Sarbanes Oxley Act

The Sarbanes-Oxley Act of 2002, commonly referred to as SOX or Sarbox, is a United States federal law enacted in response to several major corporate accounting scandals. This legislation establishes enhanced standards for all U.S. public company boards, management and public accounting firms. The Act requires the Securities and Exchange Commission (SEC) to implement rulings on requirements to comply with the new law. In summary, SOX covers issues such as auditor independence, corporate governance, internal control assessment and increased financial disclosure.

Internal control in relation to fixed assets under the SOX mandate incorporates all financial aspects of a company's business, including revenue recognition, valuation of securities, provision of adequate reserves, and so on. Many companies have spent literally millions of dollars to be in compliance with SOX. Further, the annual testing of these Internal Controls is a major responsibility of top management, which must personally sign a compliance statement with serious potential consequences if the report is in error.

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