Company Controls Required by Law

634 Words2 Pages
Controls Required By Law Regardless of the industry a business is in, there are federal and state laws that govern how they operate and do business. Every business is affected by different state and federal law somehow. The Sarbanes Oxley Act of 2002 (SOX) governs the disclosure of business that is publically traded on a stock exchange. The Health Insurance Portability and Accountability Act of 1996 (HIPPA) dictates how business, including health insurance, health care clearing houses, and health care providers, use patient identifying information. Sarbanes Oxley Act of 2002 was enacted to protect investors by improving the accuracy and reliability of corporate disclosures. (Public Law 107-204, 2002) This law affects any publically traded company regardless of the industry of the business. Corporate management is held responsible for the validity of the financial statements, internal controls, and is required to submit Form 10-K to SEC every quarter. The Public Company Accounting Oversight Board was created by this act and given the authority to oversee how audits are performed. Audit firms are now required to undergo inspections by the PCAOB. PCAOB mandates accounting and auditing standards. Auditors are required to maintain independence and have a rotation requirement of every five years. It is illegal for corporate management to improperly influence the conduct of audits. The act also enhances corporate disclosure. Corporate management has a requirement of forfeiting
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