The Impact of Sarbanes-Oxley

683 words | 3 page(s)

This report examines the way that the Sarbanes-Oxley Act of 2002 has impacted the collection and disposition of financial data on SEC traded companies in general, and the organization of my choice specifically. The report summarizes the way financial data is recorded at the customer level and disseminated to executives for inclusion in monthly or quarterly reports. Information on the specifics of the Act are taken from the book, What is Sarbanes-Oxley? General information of the impact of computer auditing is taken from an article in Computer World. The article, 典elling Right From Wrong� discusses how IT departments have had to revamp data storage and retrieval methods, along with procedures for ethical dilemmas such as software licensing, vendor selections and access to software and tools.

Sarbanes-Oxley Act (SOX) was signed into law in 2002 by President George W. Bush. The law impacts all companies that have registered securities with the SEC (Lander, 2004). The law requires that all CEOs and CFOs have to personally certify that their corporations annual reports are true and accurate. The act is a direct result of the failure of companies such as Enron and WorldCom to disclose accurate accounts of profitability or the lack thereof (Lander, 2004).

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The impact of the act on a global online job board is the subject of this report. The company allows job seekers and employers to search for employment or post employment ads. Job seekers have free sites, and employers pay for the privilege of posting a job advertisement for a specified period of time. Ads are purchased online or through the assistance of a sales representative. The impact of SOX on the organization can be found in the separation of customer service, back office and sales. The sales teams are limited in how sales, credits and refunds are handled. Audit trails exist for all transactions with the date, time and log-on ID of each person who created or modified the transaction. Sales reps provide customers with a quote. If the quote is accepted as a sale, the customer electronically signs the purchase order, and the sale is recorded. However, until the sale is recorded by the back office team, it is not registered as a sale. If the customer wants a modification or a refund, the sales rep is not allowed to make changes to the sale. All sales numbers are recorded monthly by the back office team, and sent to the Senior Vice President of Sales (SVP). All revenue divisions must have their sales certified by a SVP before the numbers are rolled up to the CFO and other senior executives for preparation of financial reports.

The SEC requires that a company have procedures when disclosing financial records. This includes “internal control over financial reporting” (Lander, 2004). The job board has met the burden of this ruling by placing separation of job functions, and audit trails for all people involved in transactions.
Another significant impact of SOX is the increased participation of the IT department in auditing, reporting and governance. The job board company ensures that log-in information and access to software is segmented by job function. For example, a back office employee has access to software not available to sales or customer service. Members of management have access to refund or exchange screens that are not available to hourly staff. IT departments have a greater role after the passing of SOX in maintaining and backing up information and data(Jaffe, 2004) .

Computer audits at the online job board are performed by IT remotely as well as at the terminals. The company has policies regarding terminal locking and maintaining passwords. Employees are expected to adhere to rules regarding access. No one is allowed to use another person’s log-in or sign-in credentials. As mentioned previously, all transactions are time and date stamped. Quarterly, the director of the back office teams randomly selects sales, back office and customer service transactions. Specifically they evaluate transactions for compliance with sales, discounting, refund or exchange policies. The reports are rolled up to each department head for the his or her own department, and to the fraud and compliance team in aggregate.

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