Tuesday, June 28, 2011: We have celebrated the 9th anniversary of Sarbanes-Oxley Act, and we had the opportunity to remember what has happened during the previous 12 months (June 28, 2010 to June 28, 2011).
The Sarbanes Oxley Act has become much more important during this year.
1. The new US financial regulatory reform, the Dodd Frank Act, amends some sections of the Sarbanes Oxley Act.
SOX is part of the new regulatory reform. They did not delete the SOX provisions; they have made them more strict and clever.
For example, whistleblowers now have a monetary incentive to report matters to the SEC (they may be entitled to as much as 10 percent to 30 percent of the monetary sanctions imposed).
Management should clearly explain to all employees the importance of prompt reporting of violations.
Public companies should do much more for complaints submitted to audit committees or employee hotlines to address areas of potential concern.
The Dodd-Frank Act also provides an employee with remedies against the employer that has violated the whistleblower provisions of the Dodd-Frank Act.
These remedies include reinstatement with the same seniority status that the individual would have had, two times the amount of back pay otherwise owed to the individual, with interest, and even compensation for litigation costs, expert witness fees, and reasonable attorneys’ fees.
Does it look like the end of Sarbanes Oxley? No, it is Sarbanes Oxley on steroids.
According to the Dodd Frank Act, no employer may discharge, demote, suspend, threaten, harass, directly or indirectly, or in any other manner discriminate against, a whistleblower in the terms and conditions of employment because of any lawful act done by the whistleblower:
- In providing information to the SEC in accordance with the provisions of the Dodd-Frank Act;
- In initiating, testifying in, or assisting in any investigation or judicial or administrative action of the Commission based upon or related to such information; or
- In making disclosures that are required or protected under the Sarbanes-Oxley Act, the Securities Exchange Act and any other law, rule, or regulation subject to the jurisdiction of the SEC.
2. The US Supreme Court denied putting the Public Company Accounting Oversight Board (PCAOB) out of business, and now the PCAOB, with its role clear and well understood, has decided to announce new and stricter risk assessment standards.
Sarbanes Oxley becomes more strict and mature.
3. On September 15, 2010, the Public Company Accounting Oversight Board (the “Board” or the “PCAOB”) filed with the Securities and Exchange Commission (the “Commission”) a notice (the “Notice”) of proposed rules (File No. PCAOB 2010-01) on Auditing Standards Related to the Auditor’s Assessment of and Response to Risk and Related Amendments to PCAOB Standards.
Those eight auditing standards (hereinafter referred to as “Risk Assessment Standards”), which will supersede six of the Board’s interim auditing standards, are:
• Auditing Standard (“AS”) No. 8, Audit Risk;
• AS No. 9, Audit Planning;
• AS No. 10, Supervision of the Audit Engagement;
• AS No. 11, Consideration of Materiality in Planning and Performing an Audit;
• AS No. 12, Identifying and Assessing Risks of Material Misstatement;
• AS No. 13, The Auditor’s Responses to the Risks of Material Misstatement;
• AS No. 14, Evaluating Audit Results;
• AS No. 15, Audit Evidence.
December 23, 2010 - The Commission is granting approval of the proposed rules. The rules are effective for audits of fiscal years beginning on or after December 15, 2010.
The suite of risk assessment standards, Auditing Standards No. 8 through No. 15, sets forth requirements that enhance the effectiveness of the auditor's assessment of, and response to, the risks of material misstatement in the financial statements.
The risk assessment standards address audit procedures performed throughout the audit, from the initial planning stages through the evaluation of the audit results.
"These new standards are a significant step in promoting sophisticated risk assessment in audits and minimizing the risk that the auditor will fail to detect material misstatements," said PCAOB Acting Chairman Daniel L. Goelzer.
"Identifying risks, and properly planning and performing the audit to address those risks, is essential to promoting investor confidence in audited financial statements."
Sarbanes Oxley Compliance Association (SOXCPA)-
The Sarbanes Oxley Compliance Professionals Association (SOXCPA) is the largest Association of Sarbanes Oxley professionals in the world - http://www.sarbanes-oxley-association.com.
George Lekatis is the General Manager and Chief Compliance Consultant of Compliance LLC, a leading provider of risk and compliance training and executive coaching in 36 countries.
George has more than 17,000 hours experience as a professional speaker and seminar leader. He has worked for more than 15 years as a management consultant and educator and has demonstrated exceptional presentation and communication skills.
George is the president of the Basel ii Compliance Professionals Association (BCPA, www.basel-ii-association.com), the largest association of Basel ii professionals in the world, the Basel iii Compliance Professionals Association (BiiiCPA, www.basel-iii-association.com), the largest association of Basel iii professionals in the world, the Sarbanes Oxley Compliance Professionals Association (SOXCPA, www.sarbanes-oxley-association.com), the largest Association of Sarbanes Oxley professionals in the world, and the Solvency II Association (www.solvency-ii-association.com), which is also the largest Association of Solvency II professionals in the world.
George is an expert witness, qualified to investigate and testify about risk and compliance management standards, policies, procedures, best practices, due care and due diligence.
President of the Sarbanes Oxley Compliance Professionals Association (SOXCPA)
General Manager and Chief Compliance Consultant, Compliance LLC
1200 G Street NW Suite 800, Washington DC 20005, USA
Tel: (202) 449-9750