Section 401(a) of SOXA added §13(j) to the Securities Exchange Act of 1934, which required the SEC to adopt final rules by Jan. FALSE STATEMENT CERTIFICATION SARBANES OXLEY CONVICTIONS SERIESThe §400 series specifically addresses disclosure and reporting issues. Other parts of SOXA address SEC resources and authority and white-collar crime penalties. SOXA is comprised of a number of sections and subsections covering matters ranging from establishing and defining the duties of the Public Company Accounting Oversight Board (§101, et al.) to regulating the actions of auditors (§201, et al.) to defining corporate responsibility for financial reporting (§301, et al.). Sarbanes-Oxley §401(a): Background Overview The SEC has weighed in as required by SOXA in its recent release, "Disclosure in Management's Discussion and Analysis about Off-balance Sheet Arrangements and Aggregate Contractual Obligations." 3 Before we dive into the SEC's requirements, let us begin with an overview of §401(a), Off-balance Sheet Arrangements and Aggregate Contractual Obligations. These are very difficult questions to address. FALSE STATEMENT CERTIFICATION SARBANES OXLEY CONVICTIONS REGISTRATIONWould the existence of SOXA-type rules have prevented some of the larger financial and accounting scandals- e.g., Enron, Tyco and WorldCom-or could it have reduced the number of bankruptcies in recent years? Additionally, is the process of improving financial disclosures moving forward quickly enough to achieve SOXA's objectives of "transparency" and "accountability?" And most importantly, will the enactment of SOXA, including §401(a) and the SEC's new disclosure requirements related to off-balance sheet arrangements and aggregate contractual obligations, reduce the potential for scandal and more readily alert readers of financial statements, registration statements or proxy information to difficult financial transactions? However, the compliance period for §404 of SOXA, relating specifically to Internal Control Over Financial Reporting and Certification of Disclosures, was recently extended after the SEC released its final form "Rules" on June 6, 2003. For example, §401(a) of SOXA (to be discussed further) required compliance for fiscal year-end reporting on or after J(an exception for contractual obligations was extended to Dec. Interestingly, more than a year after SOXA was signed into law, there is still confusion over the specific implementation and reporting of enforcement parameters of each of its many sections, as well as varying compliance effective dates. Enacted into law on July 30, 2002, SOXA represents the reaction of Congress to the recent corporate scandals and business failures. By now, investors and professionals dealing with financial reporting should be familiar with SOXA. The authors of the Sarbanes-Oxley Act of 2002 (SOXA), and now more recently the Securities and Exchange Commission (SEC), have taken action to rectify the matter. However, questions persist that the content of those disclosures were not adequate enough for "average" investors or even institutional investors to make informed business decisions. With the exception of those with alleged "accounting scandals," most companies did, in one way or another, disclose the off-balance sheet activity. Although each of the recent large business bankruptcies of public companies has unique circumstances accounting for its failure, most of the companies also have a common thread: the presence of off-balance sheet and contractual arrangements.Ī review of news stories quickly draws attention to the fact that most have had one or more off-balance sheet arrangements or obligations.
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