How are SAS 70 and the Sarbanes-Oxley Act related?
The Sarbanes-Oxley Act of 2002 (the Act) was implemented following several high profile cases that involved corporate fraud and gross negligence on behalf of the executives, management and financial statement auditors of publicly registered companies. The Act was primarily designed to restore investor confidence. To help achieve this goal, the Act implemented a requirement that management of publicly registered companies must certify their financial results on a quarterly basis (§ 302) and issue an annual assertion that internal controls over financial reporting are effective (§ 404). Section 404 also introduced a new requirement that financial statement auditors must issue an opinion regarding the effectiveness of its clients’ internal controls over financial reporting in addition to their traditional opinion related to the fairness of presentation of the financial statements. These new requirements introduced individual civil and criminal penalties for members of management and audit
