Sarbanes-Oxley: where Information-Technology,
Finance and Ethics Meet
BY
Margaret Muturi
Contents
• Brief History
• Objectives of Sarbanes Oxley
• Test book questions
• Current information
• References
• Question & Answers
Sarbanes Oxley History
• Came in to force mainly due to financial scandals
committed by cooperate giants like Enron,
WorldCom, etc
• Created by U.S senator Paul Sarbanes
(D-Maryland) and US congressman Michael Oxley
(R-Ohio)
• It was signed into law July 30,2002 to become
Sarbanes Oxley act of 2002 (Sox)
Objectives of Sarbanes Oxley
• In response to companies like Arthur Anderson, Enron
WorldCom scandal the SOX Act seeks to :
• Restore the public confidence in both public accounting and
publicly traded securities
• Assure ethical business practices through heightened levels of
executive awareness and accountability
• Creating of the public accounting oversight Board
(PCAOB)
• All audits report or related materials must be kept by the
auditor at least 5 years
• Make sure there are financial controls in place
Case study question
1. Define the relationship between Ethics and
Sarbanes Oxley Act
•
Code of ethics structure for finance personnel in
respect to conflict of interests –control environment
•
Whistle-blower protections
•
Cheques and balances
•
CEO and CFOs must certify in any periodic report the
truthfulness and accurateness of the report-creates
liability
Case Study Question
2. Why is record management an area of concern to
the entire organizations
• Information and communication: making sure the right people
have the right information,
• making sure no alteration of falsifying of records
• Who has access to the information - Internal controls section 404
• Management controls
• Section 802 of Sarbanes Oxley: _requires public and their public
accounting firms to retain records, including electronic records that
impact the company’s asset or performance.
Case Study Question
3.
What are two policies an organization can
implement to achieve Sarbanes Oxley compliance
• Internal controls: Who has authorization and
access to information
• Management oversight: This one of the key area
of SOX. Making sure that the management
knows who has the right authorization to the
information.
Case Study Question
• 4.
Identify the biggest road block for
organizations that are attempting to
achieve Sarbanes-Oxley compliance.
• Training
• Very expensive to implement
• Challenging on segregation of duties
• Creating oversight in different systems
Case Study Question
5.
What type of information systems might
facilitate SOX compliance
• System controls: where there is limited
access of information which is only
available to authorized personnel.
• Change management controls: whenever
there is change in the management the
organization can change the software or
information of the software codes.
Case Study Question
6. How will electronic monitoring affect the morale
and performance of employees workplace?
• Employees may not be motivated
• Invasion of privacy
• Employees trust at work place compromised
• Unethical employees trying to beat the system
Case Study Question
• 7.
what do you think an unethical accountant or
manger at Enron thought were the rewards and
responsibilities associated with the job
• Most of them must have thought as long as we keep getting
paid, and our retirement accounts keep growing, we will
keep our mouths shut
• Whistle blowers afraid of loosing their job
• Huge bonuses as long as the books reflected profits
Current Information
Since SOX was enacted in 2002 a lot of things have been
changed to make sure the system work.
• Updated software have been put in place example IT
general controls (ITCG), control objectives for in
information technology (COBIT)
• Securities and Exchange commission (SEC) has
imposed unprecented penalties enforcement of 10
million or more aganaist 115 parties
• The whistle blower protection under occupation safety
and health Administration( OSHA)
Current Information
• Anti -Sarbanes Oxley mood arises in Europe
• Other laws have emerged example HIPAA
• Cases of Fraud still being experienced for
example current case of Bernard Maddoff In
the US and his trading operation in London
• The whistle blowers can make a difference and
feel protected for example Harry Markopolos,
the Boston based investor who was a whistle
blower for Maddoff fraud.
Work cited
• Business Driven technology by Haag Baltzan Phillips
• www.logicalsecurity.com/resources_sox.html
• www.secutityfocus.com/print columnists/322
• www.mondaq.com/articles.asp?articleid=695&print=1
• www.naturalnews.com/z017131.html
• Ezinearticles .com/?The-History-of Sarbanes Oxley
&id=143573&opt=print
• The Wall Street Journal
• www.online.wsj.com/article/SB1233619899636241467.html
• www.online.wsj.com/article/SB123681392137901653.html
END
• QUESTION & ANSWERS