Accounting on the Sarbanes-Oxley Compliance and monitoring program

Accounting on the Sarbanes-Oxley Compliance and monitoring program

Evaluation and key elements

In order to prevent corporate and accounting fraud on July 30 2002, the legal authorities of the USA drafted the Sarbanes-Oxley Act with the prime objective of restoring the trust of public in the activities of the corporate world. This act requires all government and public related company to implement new governance standards that increased the role of board members in the drafting of financial and auditing process (Haworth & Pietron, 2006).

In addition to this, the act was intended to improve the authenticity of the financial reporting and auditing of the corporate firms. Moreover, since its incorporation majority of the public limited companies and non-profit organization has implemented all the key features of this act to retain the trust of public and to prevent organization from participating in any illegal activities, four key features of this act are listed.

Audit members of the public limited companies must be independent, and have the authority to perform inspection on every aspect of company operation

Public limited companies must strengthened the audit members, and corporate governance system of the company

Companies must ensure transparency, accountability of operations, and ensure the protection of investor's information

Independence of the auditors must be improved

Implementation of Sarbanes-Oxley ACT

All public companies those are anxious to progress the business operation with the implementation of SOX compliance come across certain hurdles, like through what ways a company can make the compliance process cost effective, sustainable while improving their financial operations.

Further, another feature element of compliance means the ability of the company to monitor its business operations, and to ensure that all process is devotion to compliance procedure, with respect to proper quality and accuracy. However, company can effectively implement the policies of the Sarbanes Oxley act through the following defined steps.

Avoiding bullwhip effect

Majority of companies that consider compliance as a chain of planned exercises, begin to drag themselves into extensive work and cost. Further, after carrying out all compliance, exercise and removing the hurdles most of these companies are observed to become relax, and this results in decline of their implementation planning. Despite of becoming relax, these companies must look towards as positive move toward the compliance of the act, and try to manage the required needs that arise during the process of compliance. In addition to this, structure of SOX can be understood ...