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SARBANES-OXLEY ACT (SARBOX, SOX) by soft skills

SARBANES-OXLEY ACT (SARBOX, SOX) After the collapse of Enron, WorldCom, and a series of other American corporate frauds and failures, the US Government was keen to act quickly and firmly.
On 30 July 2002, the Sarbanes-Oxley Act was passed (it is named after the 2 US politicians who sponsored it through Congress). It was not long before it became known as Sarbox … or SOX.
There are many differences between SOX and the UK Combined Code:
● SOX is law, with strict penalties for non-compliance. The Combined Code is Best Practice, not law
● SOX makes audit partner rotation the law, whereas in the UK such matters are covered by the profession’s Codes of Ethics
● SOX has a ban on auditors providing a range of "other services" to their audit clients. In the UK, very few "other services" are banned, but are instead considered within the objectivity area of Ethics.
● SOX requires the CEO and CFO to personally attest to the accuracy of the Annual Report, Quarterly Reports, and to the effectiveness of Internal Control Systems. In the UK, there are general assurances in the Directors’ Report and Annual Report, but no personal certification is required
● Under SOX, the auditors must attest the Internal Controls statement. Auditors do not make any such statement in the UK
● Under SOX, if laws have been broken (e.g. accounting standards), the CEO and CFO forfeit some of their remuneration (e.g. their bonuses). There are no such rules in the UK
● Under SOX, no loans can be made by a public company to its directors or other senior executives. Whilst the same rules apply in UK law, there is a de minimus limit and there are some exemptions
In many ways, SOX and the Combined Code are very similar, but in many other ways SOX is much more strict, and of course is backed up by the US law.
The main areas in which SOX is tough are directors, auditors, and internal controls – which is hardly surprising giving many blame Enron’s collapse on a failure in
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