Canadian SOX – Bill C198

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It is a surprise that in 2012 after 10+ years in existence many business folks are not aware of the Sarbanes Oxley Act.  What is Sarbanes Oxley you ask?  Sarbanes Oxley affectionately known as SOX by our friends south of the 49th parallel came into being as a result of massive stock scandals in the U.S. created by the likes of Enron and Briex.  Millions and millions and more millions of dollars were swindled from the unsuspecting clients of these companies through falsification of reports and stock trends (my overly simplified version of the entire story.)

The main purpose of Sarbanes Oxley 2002 is to ensure corporate transparency and accountability.  Let’s  just say that in section 302 of the Sox law, the big boss (CEO and/or CFO) is made personally liable should someone in the organization “cook the books.”  Fines range from $1-$5 million accompanied by jail terms of 1-5 years.

SOX section 404 forces U.S. employers to submit quarterly and annual reports that demonstrate how the company is maintaining controls which proves the most effective measures are in place for timely and accurate reporting of the financials – the money…

Because the final sign-off of all financial reports/statements belongs to the head honchos in the organization, scrutiny is suddenly of the utmost importance.  There’s no more of that, “well, it’s ‘Bill’ handling it so it must be correct.”  The penalties are too severe for them, personally, not to keep a close eye on how the numbers are being laid out.  The third and unsuspecting party impacted by the SOX act is the IT Manager, Director or VP of IT.  They must document how each system works, how user security is set to create segregation of duties,  who has authority to approve security changes,  and, who can access the system; a task never before thought of.

Enter Bill C198; the one and only Canadian Sarbanes Oxley.  Canadian executives are a somewhat more receptive to Bill 198 than their American counterparts.  They recognize the value and feel it will help them run their organizations better.  The initial cost for companies to become SOX compliant with negligible compared to the disaster that fell upon Enron and Briex.  Canadian companies doing business in the U.S. have no choice but be compliant.    It is a cross-border mandate that must be followed if they want to continue to do business on their turf.

Here’s to helping you better understand what’s in your pocket.

Until next time.

 

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