What Sarbanes Oxley means to You. In this article the author outlines provisions companies are now required to implement. Consider the requirements imposed by Sarbanes Oxley on corporate boards of directors. Do small businesses and privately held companies have ethical duties? If so, to whom would they owe this duty? Employees? Customers? Vendors?Should the law impose ethical requirements on small businesses or privately held companies or can the marketplace police unethical business behavior?
The Sarbanes-Oxley Act (SOX) was passed by congress in 2002. This legislation introduced major changes in financial practice and corporate governance. The most important sections of Sarbanes-Oxley Act are 302,401,404,802 and 906. (Sarbanes Oxley Act, 2002).
The Act along with subsequent regulations adopted in 2003 and 2004, affected the responsibilities of auditors, board of directors and corporate managers with respect to financial reporting. (sw). The major contents of the SOX Act are as follows:
- Public Company Accounting Oversight Board.
- Auditor Independence.
- Corporate Responsibility.
- Enhanced Financial Disclosures.
- Analysts conflicts of interest.
- Corporate Fraud and Accountabiltiy.
- White-Collar crime penalty enhncements. (One Hundren Seventh Congress of the United States of America, 2002).
The small businesses are not exception to the SOX Act, the small businesses are responsible for customers, vendors, employees and for all the stakeholders of the business.
The law should impose ethical requirements for all types of businesses irrespective of size and type of organization. The SOX Act makes the organizations to be ethical towards the stakeholdes of the business.