The Sarbanes-Oxley Act

623 Words3 Pages
The Sarbanes-Oxley Act was passed in 2002 as a response to a wave of corporate accounting scandals that damaged public trust in the controls of the US financial system. SOX therefore was created in order to create the framework for better control over accounting information and better accountability among members of senior management. Damianides (2006) notes that much of the burden of providing these tighter controls has fallen to IT departments. The Act not only sets out prescriptions for tighter internal controls, but effectively mandates that senior IT managers will need to communicate those controls to their CFO and CEO, as well as to external auditors. In particular, records must be maintained carefully, which implies that to safeguard the integrity of the information, all of the firm's financial information needs to be digitized. Transactions also need to be recorded in such a manner that they can be compiled quickly and accurately into GAAP financial statements. In addition to adding the requirement for strong internal controls on the IT department something that was optional before, SOX also will mean that the IT department is going to have a higher degree of strategic integration with the rest of the firm. As a result, IT managers will need to become more accustomed with working closely with both internal auditors and with senior management. The days of IT as a function separate from other parts of the business are over under SOX, especially where it concerns
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