While the SOX Act of 2002 as many different sections, it would be important to focus on some of the major changes that were implemented.
AUDITORS:
First the act called for the creation of the PCAOB (Public Company Accounting Oversight Board), which in effect is a Government entity that controls public accounting. This is a major change in profession. For many years the profession was self-regulated. That is there was no direct Government involvement.
With the PCAOB this entities charter is to audit the auditors. Another change was the type of services that could be offered and the approval authority for those services. In this case services must be approved by the Audit Committee of the Board of Directors and secondly auditor can not offer or provide certain services to their audit clients. This includes consulting services, accounting services, IT services, certain tax services and any other service that would cause a conflict of interest.
This section was in direct response to the critics that argued that Anderson sold out to Enron as they were also the consultants to this company and was in effect advising the company on the services that were being audited.
COMPANY:
The major change directly affected executive management. While there were other processes in place that indicated that management was responsible for the financial information presented to the general public, SOX forced the executives (CEO and CFO) to provide a quarterly certification letter indicating that the necessary internal controls are in place, operating and effective.
On the other hand, SOX provides under Section 302 that the management assessment of the control environment shall be audited by the external auditor and that the auditor would provide a report on the internal controls.
DISCUSSING CHANGES:
With these issues in mind, it will be important for each one of you to research the SOX Act in more detail, read current literature on how this affects your organization (if applicable) or the business community in general.