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SOX My Presentation

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by

Jessica Peterson

on 6 June 2013

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Transcript of SOX My Presentation

Requirements of Sox Enforcing the Law SOX History? The Product Terms
&
Definitions SOX References To Improve
Financial Reporting
Independent Audits
Accounting Services
Public Companies
Guidelines for Best Practice
Explain Regulations SOX's Purpose Enforcing the Law Why the SOX Act was created
Basic Understanding of the Act
Who is protected
Essential areas of the SOX Act Objective Sarbanes-Oxley Act Resources Have policies, regulations, in place
Currently has review process
Internal Auditors
Joint Commission reviews processes What is Irwin Army Community Hospital doing to Avoid Similar Penalties ? By:
Jessica T. Peterson NO one will
ever know... The WHY behind the Act... Businessmen Murray Waldron and William Rector create Long Distance Discount Co (LDDC)
Later became WorldCom 1983 1999 1985 Enron shares are at their highest $90 2000 ENRON
Aug-Finance executive meets with CEO to discuss concerns
Oct-$638 million in 3rd quarter losses
$1.2 billion reduction in shareholder equity
Nov 8-Refiles financial statements last 5 years with SEC
$586 million in losses
Nov 19-$690 million debt is due Nov. 27
Nov 28 - Stock drops below $1
Dec 2-Enron goes bankrupt
Thousands of workers laid off 2001 Enron
Jan 2- Justice Department begins criminal investigation
The total Loss 2002 Enron is formed from merging Houston Natural Gas and InterNorth WorldCom shares reach an all-time high of $61.99 2002 WorldCom
March 11- U.S. securities regulators are investigating loans and accounting practices
April 3- 3,700 workers are fired
June 5- $30 billion in debt
June 25- World Com admits they lied
Total Loss $25-$40 Billion $73.7 Billion Sarbanes-Oxley Act (Public Law 107-204)

2002- Passed Senate by a 99-0 vote
House Representatives by 423-3
July 30- President Bush signs SOX
Effective Immediately
Significant change to securities law since 1934 Cimilluca, D., & Stancavish, D. (2004, March 2004). WorldCom restates results, has $73.7 bln of losses. (Bloomberg L.P.) Retrieved May 16, 2013, from Bloomberg.com: http://www.bloomberg.com/apps/news?pid=newsarchive&sid=atyrQDEZp5gg O'Reilly, C. (2005, 8 11). From WorldCom's orgin to Sullivan fraud sentence:timeline. Retrieved May 16, 2013, from
Bloomberg.com: http://www.bloomberg.com/apps/news?pid=newsarchive&sid=a.OFsbsk_1pQ Public Broadcasting Service. (2002, January). The rise and fall of Enron. (PBS,
Producer, & MacNeil/Lehrer) Retrieved May 17, 2013, from Online NewsHour: http://www.pbs.org/newshour/bb/infrastructure/power/enron_time.html O'Reilly, C. (2005, 8 11). From WorldCom's orgin to Sullivan fraud sentence:timeline. Retrieved May 16, 2013, from
Bloomberg.com: http://www.bloomberg.com/apps/news?pid=newsarchive&sid=a.OFsbsk_1pQ Public Broadcasting Service. (2002, January). The rise and fall of Enron. (PBS,
Producer, & MacNeil/Lehrer) Retrieved May 17, 2013, from Online NewsHour: http://www.pbs.org/newshour/bb/infrastructure/power/enron_time.html Ackman, D. (2005, June 5). Enron's bankers make a deal. (Forbes.com) Retrieved
May 16, 2013, from Forbes: http://www.forbes.com/2005/06/15/jpmorgan-enron-settlement-cx_da_0615topnews.htm Public Broadcasting Service. (2002, January). The rise and fall of Enron. (PBS,
Producer, & MacNeil/Lehrer) Retrieved May 17, 2013, from Online NewsHour: http://www.pbs.org/newshour/bb/infrastructure/power/enron_time.html Public Broadcasting Service. (2002, January). The rise and fall of Enron. (PBS,
Producer, & MacNeil/Lehrer) Retrieved May 17, 2013, from Online NewsHour: http://www.pbs.org/newshour/bb/infrastructure/power/enron_time.html New York State Society of CPA's. (2009). The Sarbanes-Oxley Act of 2002 . (New York State Society of Certified Public Accountants) Retrieved May 16,
2013, from The Web Site of the New York State Society of CPA's: http://www.nysscpa.org/oxleyact2002.htm Zameeruddin, R. (2003). The Sarbanes-Oxley Act of 2002: an overview, analysis, and caveats. A Journal of Applied Topics in Business and Economics , 1-13. 2002 Coates, J. C. (2007). The goals and promise of the Sarbanes-Oxley Act. Journal of Economic Perspectives , 21 (1), 91-116.
Zameeruddin, R. (2003). The Sarbanes-Oxley Act of 2002: an overview, analysis, and caveats. A Journal of Applied Topics in Business and
Economics , 1-13. SOX's Provisions 11 Sox Provisions Encompasses
Ethics
Controls
Accountability Four Main Provisions Public Company Accounting Oversight Board
Corporate Responsibility
Enhanced Financial Disclosures
Corporate Fraud and Accountability Public Company Accounting Oversight Board Corporate Responsibility Enhanced Financial Disclosures Corporate Fraud and Accountability AKA...The Board, PCAOB
Is the core of the Act
Oversees and regulates auditors
Registers accounting firms
Conducts inspections
Investigate violations
Set standards
Reinforce existing laws against
Fraud
Theft
5 members
Only 2 members can be CPAs
CPAS cannot practice in last 5 years if Chair
Serve exclusively and full time
No outside work
2 term max, 5 year terms
SEC appoints Chair and Members Audit committee are board members
Seek independent counsel or advisors
Company provides funding
CEO and CFO prepare statement
Verify all documentation present in Audit report
Documentation represents company's financial state
Forfeiture of Bonuses and Profits Determines what information is released and when
Provides controls on accuracy and disclosure time for reports
When changes occur
Management Assessment of Internal Controls
Real Time Disclosures
Change in materials reported to PCAOB Code of Ethics for Senior Financial officer Prohibition on Personal Loans to Executives It is a felony to-
KNOWINGLY destroy or create documents
influence or obstruct federal investigation
Auditors must keep paperwork for 5 years
Employees and accounting firms are extended "Whistleblower Protection"
New Security Fraud has penalties and imprisonment up to 10 years American Institute of CPAs. (2006, June 22). Summary of the provisions of the Sarbnes-Oxley Act of 2002. (A. I. CPA,
Producer) Retrieved May 16, 2013, from AICPA: http://www.aicpa.org/InterestAreas/ForensicAndValuation/Resources American Institute of CPAs. (2006, June 22). Summary of the provisions of the Sarbnes-Oxley Act of 2002. (A. I. CPA,
Producer) Retrieved May 16, 2013, from AICPA: http://www.aicpa.org/InterestAreas/ForensicAndValuation/Resources O'Farrell, R. (2013). Chron. Retrieved May 19, 2013, from Sarbanes FAQ:
http://smallbusiness.chron.com/sarbanes-faq-16839.html O'Farrell, R. (2013). Chron. Retrieved May 19, 2013, from Sarbanes FAQ:
http://smallbusiness.chron.com/sarbanes-faq-16839.html American Institute of CPAs. (2006, June 22). Summary of the provisions of the
Sarbnes-Oxley Act of 2002. (A. I. CPA, Producer) Retrieved May 16, 2013, from AICPA: http://www.aicpa.org/InterestAreas/ForensicAndValuation/Resources American Institute of CPAs. (2006, June 22). Summary of the provisions of the Sarbnes-Oxley Act of 2002.
(A. I. CPA, Producer) Retrieved May 16, 2013, from AICPA: http://www.aicpa.org/InterestAreas/ForensicAndValuation/Resources Attorneys Oversee the audit of public companies PCAOB SEC The Board must file reports to the SEC Auditors Everyone Federal Courts Investors Issuer-Anyone required to file reports with SEC
Person Associated with a Public Accounting Firm-
Proprietor
Partner
Shareholder
Accountant
Professional Employee
Professional Standard-
Relate to preparing or issuing of audit reports
Auditing Standards
Quality Control Auditors Prepare and maintain paper work for 7 years Evaluate internal controls and procedures 2ND review partner for audit reports Do records reflect transaction Report any discrepancies Executive Officers
and
Directors Reassures Reports truly represent company Disclose Fraud and Significant Deficiencies Establish and maintain
internal controls
Reviewed effectiveness Personally Review Reports Report Changes Penalties Certifying audit reports comply
with SEC Act of 1934
$1,000,000
Up to 10 years imprisonment WILLFULLY certifying ANY
non-complying periodic report
$5,000,000
Up to 20 years imprisonment Questions?
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