Sarbanes–Oxley Bill: New challenges for the financial professional

Weirich, Thomas R.; Rouse, Robert W.

doi:10.1002/jcaf.10137

Cited by 2 publications

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“…12 Compliance with GAAP (Generally Accepted Accounting Principles) is not enough! Companies must reach beyond GAAP to fair presentation.…”

Section: Internal Auditmentioning

confidence: 99%

“…The Act requires publicly held companies' "CEO and CFO to certify their financial statements and other financial information included in the report, fairly present in all material respects the financial condition and results of operations of the issuer as of, and for, the periods presented in the report." 12 Compliance with GAAP (Generally Accepted Accounting Principles) is not enough! Companies must reach beyond GAAP to fair presentation.…”

Section: Exhibitmentioning

confidence: 99%

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Corporate governance: Big changes ahead

Goldberg

Danko

2003

J Corp Accounting Finance

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responsibility of management and not the external auditor's responsibility.Internal control procedures should be properly documented and internal audit should routinely test controls. According to the Act, management is now required to issue a report on internal controls and evaluation of controls. Internal audit should aid in this task. New systems implementation teams should include internal audit to ensure controls are made a focal point of the implementation.New U.S. federal securities laws require corporate management to document a company's overall internal control assessment in each annual or quarterly report. The report needs to be based on an evaluation performed 90 days prior to the report date. 3 The internal control structure is not the sole responsibility of internal audit. Boards of directors and senior management have to understand their company's internal controls and not just rely on internal auditors and the external auditors. Controls need to come out of the closet they have been hiding in. Outdated flowcharts need to be analyzed and updated. Controls must now be viewed as central to the "company culture."Controls are one reason Enron toppled. Enron's board waived their conflict of interest policy, allowing the CFO to invest in the corporation's special purpose entities (SPEs). The board did not follow up to ensure the mandated compensating controls were being followed. 4 Key participants in a company's internal control system are the audit committee and internal auditors. Internal audit reviews the design and practice of internal control procedures throughout the corporation. The results of their testing and follow-up procedures should be reported to the audit committee. Since the core of top management's job is to ensure the evaluation and control of risk, companies should consider basing a portion of executives' evaluation on design of and compliance with internal controls. Currently, most executives are not aware of the internal controls in place and view this evaluation as an external audit function. Based on the legislation passed, this attitude needs to change.Information systems personnel should not be forgotten in this process. Systems personnel usually do not have a broad perspective relating to overall internal controls involving the entire company. When new information systems are implemented, internal controls should be part of the package. Often they are not. The system implementers, who can no longer be the external audit firm personnel, must work side by side with internal audit to ensure a solid foundation of internal controls. The attitude that controls are the external auditor's job is outdated and dangerous. AUDIT COMMITTEESAt many companies, audit committees have a limited role and a backseat position. The Act focuses much attention on the need for a change in the role of the audit committee. Today, the audit committee often functions as a "rubber stamp" to the auditors "clean opinion." Under the Act, audit committees are now responsible for (1) oversight of external audito...

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“…12 Compliance with GAAP (Generally Accepted Accounting Principles) is not enough! Companies must reach beyond GAAP to fair presentation.…”

Section: Internal Auditmentioning

confidence: 99%

Section: Exhibitmentioning

confidence: 99%

Corporate governance: Big changes ahead

Goldberg

Danko

2003

J Corp Accounting Finance

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“…The periodic waves of ethical scandals in the finance and investment industry have been followed by severe scrutiny and legal reforms (Jennings 2005;Weirich and Rouse 2003). For example, in the bull market of the 1990s, many in-house analysts had strong incentives to bolster their banks' investment operations.…”

Section: Ethical Vulnerabilities Of the Investment Professionsmentioning

confidence: 99%

The Psychology of Ethics in the Finance and Investment Industry

Oberlechner¹

2007

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BiographyThomas Oberlechner is professor of psychology at Webster University in Vienna. His research on psychological aspects of decision making in financial markets has led him onto the trading floors of many of the world's leading markets; results have appeared in numerous academic and professional journals in psychology and finance. He is also the author of The Psychology of the Foreign Exchange Market. Professor Oberlechner has extensive experience as an instructor at executive seminars and professional development programs. He also deals with questions of ethics in his practice as a clinical psychologist and management coach. Professor Oberlechner holds an EdM in counseling and consulting psychology from Harvard University and a PhD and JD from the University of Vienna.

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Sarbanes–Oxley Bill: New challenges for the financial professional

Abstract: The Sarbanes–Oxley Bill was Congress's response to the recent corporate scandals. What will it change? And how will it affect you? © 2003 Wiley Periodicals, Inc.

Cited by 2 publications

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Corporate governance: Big changes ahead

Corporate governance: Big changes ahead

The Psychology of Ethics in the Finance and Investment Industry

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