Sarbanes-Oxley Act was introduced in 2002 to ensure investors’ confidence in financial statements and to prevent / reduce number of financial scams. The Act has significant impact on way different companies report and disclose their financial information. It also includes all the banks and financial institutions as well.
Some of the disclosure requirements are as follows:
It must include disclosure of all off-balance-sheet arrangements and known contractual agreements with other parties
Must disclose if a Code of Ethics exists, and must make the Code publicly available through its Web site or SEC filings
Waivers to the Code must be reported and disclosed properly
Made corporate accountability mandatory which requires CEOs and CFOs to certify that the information presented is correct or accurate.
Authorities are held responsible for any false or misleading information provided and may be punished for such offense.
A company‘s annual report must contain a report from management on internal control which should include
Management’s responsibility for establishing and maintaining an adequate internal control structure and procedures for financial reporting
Identifies the framework used by management to evaluate effectiveness
Should be attested as true by external auditor and auditors cannot perform management functions without impairing independence