Whether you are a US company, or just a company with links back to the US, you may be required to know about the Sarbanes Oxley act. If you are an American company and haven’t heard of it before, then you have already learnt something about it. It’s a United States law.

Signed into US law in 2002, the Sarbanes Oxley is an act. It was created to try and prevent the things that went on in companies like Enron and Worldcom. Both of these companies were found to have been working using fraud deals for a number of years. At that current time, the companies weren’t required to show their records to the US government.

What the act does is it ensures that how businesses are run is legitimate and if they are not, it holds the key players responsible for the problems.

The act means that Chief Executive Officers and Chief Financial Officers are required to sign the records for the business. They must sign the books before handing them over to ensure that the information is true and it represents the earnings of the company.

If this is not done or it turns out the records are false, there are some hard punishments that come down on the Chief Officers of the company.

Like what I said towards the top of the post, you might not be required to abide by the act. You are only required to abide by the law if your company is based in the US, UK or Europe and it has listings in the United States stock exchange. You will also have to abide by the act if your company is based in the UK or Europe and it’s a subsidiary of another US company.

The act can be very annoying for some companies. Because the company must report every transaction that has been made, even the sale and purchase of assets is required. This is where people have the problem because all the company’s fixed assets must before recorded.

The process of fixed asset accounting can be expensive and take time. If you try and do it yourself, it can take several months based on the size of your company. The easiest way to ensure you have recorded all your assets is by outsourcing the process to an asset management company.

Unfortunately, it can still be expensive to do. However, the majority of asset management companies will offer you different features to make asset auditing simpler in the future. Many of the companies also offer Sarbanes Oxley compliance software which will make the job even easier for you.

Hopefully you have found this useful and now have a understanding og the Sarbanes Oxley act, whether you have to follow it or not. You most likely won’t like the act, but you can blame it on Enron and Worldcom.