Sarbanes Oxley Disclosure
sarbanes oxley disclosure
What Is Good Corporate Governance?
We have often made the case on this blog about the premium startup companies can realize as a result of good corporate governance. Investors will pay more to acquire a well-organized company, either because they perceive the company as better-managed, are willing to pay for convenience, or face less uncertainty in evaluating the company’s chance of success.
As we spread the gospel of good corporate governance, however, it’s time to define the term. There are really two ways to look at it. Corporate governance has its regulatory definition and then its intangible one, the one that is a little harder to define. Both definitions though center around regulatory adherence or reporting requirements.
The Regulatory Definition
The Australian Stock Exchange, in the wake of the accounting frauds of 2002, presented 10 Principles of Corporate Governance that emphasized accountability and respect for shareholders. These principles include laying a “Solid Foundation for Management and Oversight,” which calls for better-defined role responsibility in management to ensure procedures are followed. The Australian document also recommends companies “Safeguard Integrity in Financial Reporting,” which states that financial documents should be independently audited and verified.
Sarbanes-Oxley defines corporate governance in terms of proper disclosures to shareholders and regulators and clarity in financial results. The law advises that companies create an audit committee and be credible in raising capital.
The Intangible Definition
These tow-the-line definitions above try and present black-and-white definitions of corporate governance, which makes sense considering they were written in the wake of financial scandals. But good corporate governance, particularly for smaller, privately held companies, requires more than creating a committee or following a certain reporting schedule. For young firms, corporate governance involves a sense of professionalism, infrastructure, policy, and organization that separates the gifted, but sloppy entrepreneurs from the industry’s Next Big Thing.
Good corporate governance is knowing where your important documents are filed.
Good corporate governance is communicating openly and frequently with your board members.
Good corporate governance is creating infrastructure to safeguard against electronic failure, management change, and other unexpected hurdles.
When investors and potential acquirers see the evidence of a company that is not just successful in terms of clients and revenue but in terms of operational and governance best practices, that’s when they are willing to pay a bit more.
What else would you add to the list of good corporate governance?
Securities and Exchange Commission..Is this fraud? what should be done if….?
Should the SEC do anything about businesses that write off massive amounts of inventory, then sell the inventory later and not report the sales. Is there a rule or act that directs the disclosure of material transactions? If so, what are they? Does the Sarbanes-Oxley Act of 2002 have an impact on this issue? How would the SEC catch this type of tranaction? What are the penalties in this type of non disclosure act? How could they monitor if a company includes or excludes something important from their financial statement disclosure?
This is something that should be detected by the auditing firm. If they do and they determine it was fraudulent, the issue is to be reported to the Audit Committee and then there is an obligation to report to the SEC. Financial statements would have to be restated, it may result in an adverse audit opinion (depending on the amount).
Analyzing Dodd-Frank Impact on Listed REITs – Ventas’ Benson on New SEC Rules, Corporate Governance
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Sarbanes-Oxley Guide for Finance and Information Technology Professionals $24.99 Praise for Sarbanes-Oxley Guide for Finance and Information Technology Professionals”Effective SOX programs enlist the entire organization to build and monitor a compliant control environment. However, even the best SOX programs are inefficient at best, ineffective at worst, if there is a lack of informed, competent finance and IT personnel to support the effort. This book provides these important… |
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Manager’s Guide to Compliance: Sarbanes-Oxley, COSO, ERM, COBIT, IFRS, BASEL II, OMB’s A-123, ASX 10, OECD Principles, Turnbull Guidance, Best Practices, and Case Studies (Manager’s Guide Series) $50.75 Compliance requirements are here to stay.Prepare your company for the growing challenge.A Wall Street Journal/Harris poll revealed that two thirds of investors express doubts in the ability of corporate boards of directors to provide effective oversight. In the shadow of recent global scandals involving businesses such as Parmalat and WorldCom, Manager’s Guide to Compliance: Best Practices and Cas… |
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What is Sarbanes-Oxley? $2.46 Everything corporate employees must know to understand–and comply with–the Sarbanes-Oxley Act No law in recent memory has caused more confusion and apprehension in corporate America than the Sarbanes-Oxley Act (SOA). What Is Sarbanes-Oxley? is a concise, comprehensive overview of the act, filled with plain-English explanations of the vital details employees at every level must know and understan… |
