Accounting
The economic climate of the past decade has influenced how accounting firms maintain their records. Certain regulations have been enacted that require these organizations to maintain specific records for required periods of time or face financial penalties, incarceration or both.
This page is devoted to the most far reaching of the laws, the Sarbanes Oxley Act of 2002 (SOX) and how it affects accounting firms.
The Securities and Exchange Commission enacted the Sarbanes-Oxley Act in 2002 to improve investor confidence in the market and publicly traded firms. Among other things, the Act specifies the corporate responsibilities for financial statements/reporting and the retention and protection of records. The Act also defines the penalties for non compliance. The law contains 11 titles, 2 of which are described here.
Sarbanes-Oxley Act Title XI, Corporate Fraud Accountability
Section 1102 Tampering with a Record or Otherwise Impeding an Official Proceeding.
(c) Whoever corruptly (1) alters, destroys, mutilates or conceals a record, document or other object, or attempts to do so, with the intent to impair the object's integrity or availability for use in an official proceeding; or (2) otherwise obstructs, influences or impedes any official proceeding or attempts to do so, shall be fined under this title or imprisoned not more than twenty (20) years or both.
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What this means to you: While this title stems from the abuses that were occuring during the many scandals of the time, including TYCO, Adelphia and WorldCom, there is practical advice for those organizations who may or may not be covered by the law. Your organization must have a records retention policy and schedule which must be enforced. Part of your policy should include the instruction that once your organization is notified of an impending legal proceeding, you should not destroy any records relevant to that case, irrespective of what your retention schedule advises. CRS can help you create and enforce a records retention policy, schedule and program. |
Sarbanes-Oxley Act Title VIII, Corporate and Criminal Fraud Accountability
Section 802 Criminal Penalties for Altering Documents.
§1520. Destruction of Corporate Audit Records
(a)(1) Any accountant who conducts an audit of an issuer of securities to which section 10A(a) of the Securities Exchange Act of 1934 (15 U.S.C. 78j-1(a)) applies, shall maintain all audit or review papers for a period of 5 years from the end of the fiscal period in which the audit or reveiw was concluded.
NOTE: the Act ordered the Securities and Exchange Commission to promulgate rules and regulations relating to this section within 180 days of the Act . Effective as of March 3, 2003, the new requirement for retention is 7 years.
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What this means to you: This section of the Act goes on to describe what records are included in the requirement:
and other documents and records which are created, sent or received in connection with the audit or review and contain conclusions, opinions, analyses or financial data related to the audit or review. CRS can provide safe, secure, accessible storage and management of these records for you that allows you to comply with this law without sacrificing your space, workflow or time. |
For your convenience, a link to the SOX Act that you may find helpful is: www.sec.gov/spotlight/sarbanes-oxley.htm