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Presented By

Syed Kashif Shah (Group Leader)

Group Members
Kashif Ali , M.Hamid
Waqar Khan
BBA 7th
Sarbanes-Oxley Act 2002
 Nick Name(s)=Sabanes-Oxley, Sarbox, SOX

 Enacted By The 107th United States Congress

 Passed The House on April 24, 2002 Votes 334-90

 Passed The Senate on July 15, 2002

 Signed Into law by President George W.Bush on July 30, 2002

Major Elements
 1.Public Company Accounting Oversight Board (PCAOB)
 2.Auditor Independence
 3.Corporate Responsibility
 4.Enhanced Financial Disclosures
 5.Analyst Conflicts
 6.Commission Resources and Authority
 7.Studies and Reports
 8.Corporate and Criminal Fraud Accountability
 9.White Collar Crime Penalty Enhancement
 10.Corporate Tax Return
 11.Corporate Fraud Accountability
1.Public Company Accounting
Oversight Board (PCAOB)
 Title 1
 Provide Independent Public Accounting Firms Audit Services
 register public accounting firms that prepare audit reports
for issuers.
 set auditing, quality control, ethics, independence and other
standards relating to the preparation of audit reports of
 set auditing, quality control, ethics, independence and other
standards relating to the preparation of audit reports of
2.Auditor Independence
 Title II
 Establishes Standards for External Auditor Independence
 Address new Auditor Approval Requirements
 Auditor Reporting Requirements
 Restricts Auditing firms from Providing non-Audit services
(e.g Consulting) for same clients
3.Corporate Responsibility
 Title III
 Mandates That Senior Executives Take Responsibility
for Accuracy & Completeness of CFR’s.
 Interaction of External Auditors & Corporate Audit
 Penalties for Non-Compliance
4.Enhanced Financial Disclosures
 Title IV
 It describe Enhanced Reporting Requirements
 Off-balance Sheet Transactions
 Pro-forma Figures
 Stock Transactions
 It Requires Timely Reporting of Material in Financial
5.Analyst Conflicts of Interest
 Title V
 It Includes Measures & Designed To help Restore
 It defines Codes of Conduct for Securities analysts
 Disclosure of Knowable Things
 To Facilitate Investor
6.Commission Resources And
 Title VI
 Defines Practices to restore Investor Confidence
Securities Analysts.
 It also Defines The SEC’s Authority
 To Stop Those Professionals Who Which don't follow
the Predefine Conditions
 Broker
 Dealer
 Advisor
7.Studies And Reports
 Requires The Comptroller General And SEC to
Perform Various Studies and Report Their Findings
 Studies And Reports Include The Effects of
Consolidation of Public Accounting firms
 The Role of Credit Rating Agencies In the Operation of
Securities Markets
 Securities Violations and enforcement Actions
8.Corporate And Criminal Fraud
 Title VIII
 It Refers To The “Corporate and Criminal Fraud
Accountability Act”
 It Describes Specific Criminal Penalties for
Manipulation, Destruction of Financial Records
 OR Other Interference With Investigations, While
Providing Certain Protections for Whistle-Blowers
9.White Collar Crime Penalty
 Title IX
 This Section is Also Called “White Collar Crime
Penalty Enhancement Act”.
 This Section Increases The Criminal Penalties
associated with White Collar Crimes & Conspiracies
 It Recommends & Specifically adds Failure to Certify
Corporate Reports as a Criminal Offense
10.Corporate Tax Return
 Title X
 The Chief Executive Office Should Sign The Company
Tax Return
11.Corporate Fraud Accountability
 Title IX
 It Identifies Corporate Fraud & Records Tampering as
Criminal Offense And Joins those Offenses To Specific
 The SEC To Restore To Temporarily Freezing
Transactions or Payments That have been deemed
“Large” or “unusual”
Sox Act Sections
 Sox Section 302
 Sox Section 401
 Sox Section 404
 Sox Section 409
 Sox Section 802
 Sox Section 906
Sox Section 302:Disclosure of
 The Act Mandates a set of Internal Procedures
Designed to ensure Accurate financial Disclosure
 The Signing officers Must Certify that they are
“Responsible for Establishing & Maintaining Internal
Controls” & “Have Designed such controls to ensure
that material Information relating to the Company &
its Consolidated Subsidiaries is made known to such
officers by others within those entities, Particularly
during the period in which the Periodic Reports are
Being Prepared
 External Auditors Opinion
Sox Section 401:Disclosures In Periodic
Reports (Off-Balance Sheet Items)
 All materials of of-Balance Sheet Items must be
 To Follow the Accounting Principles
Sox Section 404:Assessment of
Internal Control
 Issuers are required to publish information in their
annual reports concerning the scope and adequacy of
the internal control.
 structure and procedures for financial reporting.
 This statement shall also assess the effectiveness of
such internal controls and procedures.
 The registered accounting firm shall, in the same
report, attest to and report on the assessment on the
effectiveness of the internal control structure and
procedures for financial reporting.
Sox 409:Enhanced Financial
 Issuers are required to disclose to the public, on an
urgent basis, information on material changes in their
financial condition or operations.
 These disclosures are to be presented in terms that are
easy to understand supported by trend and qualitative
information of graphic presentations as appropriate.
Sox Section 802:Criminal Penalties for
Influencing US Agency
Investigation/Proper Administration
 This section imposes penalties of fines and/or up to 20
years imprisonment for destroying, mutilating,
concealing, falsifying records, documents or tangible
objects with the intent to obstruct, impede or
influence a legal investigation.
 This section also imposes penalties of fines and/or
imprisonment up to 10 years.
Sox Section 902:Criminal Penalties for
CEO/CFO Financial Statement
 Certification of Periodic Reports
 When any Executive (CEO/CFO) Certify any
Discomfort Statements……
 Fines
 $1000000 (1 Million $)
 $5000000 (5 Million $)
 Imprisoned 20 years
 $5000000 (5 Million $) Imprisoned 20 Years=Both