What is the Sarbanes-Oxley SOX Act of 2002?
Following the bankruptcy of Enron in 2001, Congress responded to heightened public concern about corporate integrity and accounting firm irregularities by passing the Sarbanes-Oxley Act of 2002 on July 30, 2002. The law’s provisions are generally intended to: • Establish greater independence between public accounting firms and their audit clients; • Remove incentives for management misrepresentation of the corporation’s financial condition; • Provide sanctions for corporate/accounting firm misconduct; • Establish oversight of the accounting practice. Section 404 of SOX has the most relevance to HR/Payroll functions. Simply put, Section 404 requires companies to establish, maintain and evaluate an adequate internal control structure related to financial transactions and financial reporting and report on its assessment of internal controls on an annual basis. Companies must also identify the framework used to assess the effectiveness of the internal controls. Why is Section 404 relevant
