The Sarbanes-Oxley Act of 2002, devised by U.S. Sen. Paul Sarbanes and U.S. Rep. Michael Oxley, was enacted in response to several high-profile corporate financial scandals in an effort to protect shareholders and the general public from fraudulent practices and accounting errors in all businesses and industries. All domestic and international companies that have registered equity or debt securities under the U.S. Securities Exchange Act of 1934 are subject to the Sarbanes-Oxley Act. The Act is administered by the U.S. Securities and Exchange Commission (SEC), which sets deadlines for compliance and publishes rules on requirements. The Act created the Public Company Accounting Oversight Board (PCAOB), a non-profit corporation with which all companies providing audit services must register. Sarbanes-Oxley was designed to oversee the financial reporting landscape for finance professionals. Its purpose is to review legislative audit requirements and to protect investors by improving the accuracy and reliability of all corporate disclosures. The legislation affects IT departments, whose job it is to store a corporation's electronic records. Sarbanes-Oxley is significant to Redemtech in that it defines how electronic records are to be stored and for how long. The Act states that all business records, including electronic records and messages, must be saved for at least five years. The consequences for non-compliance are significant fines and/or imprisonment. Due to Sarbanes-Oxley, IT departments face the challenge of creating and maintaining a complete and cost-effective corporate records archive that satisfies compliance requirements put forth by the Act. Three rules particularly affect the management of electronic records, including disposition of records; the retention period for electronics records storage; and the type of business records that must be stored, including all business records and electronic communications. Section 404 of the Act directs companies to state management responsibility for establishing and maintaining an adequate internal control structure and procedures for financial reporting. Section 404 also requires a company's auditor to attest to, and report on, management's assessment of the effectiveness of the company's internal controls and procedures for financial reporting in accordance with standards established by the PCAOB. |
