Sarbanes Oxley and internal audit
Companies listed on the New York Stock Exchange had to prepare an internal audit department by October 31 to ensure that new audit heads could assess the scope of their departments’ work, as well as how to comply with the new ones. Sarbanes Oxley laws. They had to hire new directors and have an audit plan ready due to the provisions of the Sarbanes Oxley Act passed in 2002. The companies had to hire staff, as well as allocate a budget to the new department, determine how they will document compliance and how much work to assign the audit department. The Sarbanes Oxley Act of 2002 has created a revolutionary change in corporate governance, as well as internal control, of companies listed on the New York Stock Exchange. This law was passed to verify fraud and provide financial reporting reliability.
The law required companies listed on the New York Stock Exchange to determine financial reporting risks, devise ways to manage risks, fix the problems that create them, analyze the effectiveness of control measures taken, retest and re-document.
Sarbanes Oxley Act had a profound impact on internal auditors, who with their expertise in business process analysis, risk management, financial and operational control testing, were suddenly in high demand and all companies seemed to need their services. Therefore, apart from their normal duties, the auditors found that more and more time was being spent trying to comply with the Sarbanes-Oxley provisions. Companies that used the auditors’ expertise correctly and wisely have had unprecedented success as they provide valuable guidance on various aspects of running a business, such as risk management, prioritization of objectives, streamlining of operations, device ways to reduce operating costs and help the business get maximum tax. benefits, etc.
The Sarbanes Oxley Act made auditors examine financial reports carefully, as the consequences of misreporting them were severe. The CEO of the company and the head of internal audit had to personally certify the accuracy of the financial statements.
Sarbanes Oxley and Internal Audit:
The Sarbanes-Oxley Act has made it mandatory for internal audit departments to
- To be consulted on the internal control of the company.
- Be consulted on business risk management strategies.
- Help the company to identify, classify and evaluate risks, eliminate them, as well as evaluate the control methods adopted periodically.
- Recommend ways to control risks.
- Help in the design of an internal control program for the company.
- Recommend and write procedures for the internal control of a company.
- Help keep the repository in control.
- Do project managers make every effort to comply with section 404?
- Help design control effectiveness tests and help conduct the test and evaluate the results.
The law thus generated a great demand for companies to have good internal audit departments and their expert advisor. The role of auditors and internal audits in the management and guidance of the company increased significantly due to the Sarbanes-Oxley Act. There are companies that offer services and products to help you run business successfully.