RBCAA » Topics » Sarbanes-Oxley Act of 2002

These excerpts taken from the RBCAA 10-K filed Mar 6, 2009.
Sarbanes-Oxley Act of 2002 – The Sarbanes-Oxley Act of 2002 (the “SOX Act”) implemented legislative reforms intended to address corporate and accounting fraud. In addition to the establishment of a new accounting oversight board which enforces auditing, quality control and independence standards and is funded by fees from all publicly traded companies, the SOX Act restricts provision of both auditing and consulting services by accounting firms. To ensure auditor independence, any non-audit services being provided to an audit client require pre-approval by the company’s audit committee. In addition, the audit partners must be rotated. The SOX Act requires the principal chief executive officer and the principal chief financial officer to certify to the accuracy of periodic reports filed with the SEC, subject to civil and criminal penalties if they knowingly or willfully violate this certification requirement. In addition, under the SOX Act, counsel is required to report evidence of a

 

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material violation of the securities laws or a breach of fiduciary duty by a company to its chief executive officer or its chief legal officer, and, if such officer does not appropriately respond, to report such evidence to the audit committee or other similar committee of the board of directors or the board itself.

 

The SOX Act provides for disgorgement of bonuses issued to top executives prior to restatement of a company’s financial statements if such restatement was due to corporate misconduct. Executives are also prohibited from insider trading during retirement plan “blackout” periods, and loans to company executives are restricted. The legislation accelerated the time frame for disclosures by public companies, as they must immediately disclose any material changes in their financial condition or operations. Directors and executive officers must also provide information for most changes in ownership in a company’s securities within two business days of the change.

 

The SOX Act also increases the oversight of and codifies certain requirements relating to audit committees of public companies and how they interact with the company’s independent registered public accounting firm. Audit committee members must be independent and are barred from accepting consulting, advisory or other compensatory fees from the issuer. In addition, companies must disclose whether at least one member of the committee is a “financial expert” as defined by the SEC and if not, why not. As required by the SOX Act, the SEC has prescribed rules requiring inclusion of an internal control report and assessment by management in the annual report to shareholders. The independent registered public accounting firm that issues the audit report must attest to and report on the effectiveness of the company’s internal controls. See Part II “Item 9A. Controls and Procedures” of this Annual Report on Form 10-K.

 

Sarbanes-Oxley
Act of 2002
– The Sarbanes-Oxley Act of 2002 (the “SOX
Act”) implemented legislative reforms intended to address corporate and
accounting fraud. In addition to the establishment of a new accounting
oversight board which enforces auditing, quality control and independence
standards and is funded by fees from all publicly traded companies, the SOX Act
restricts provision of both auditing and consulting services by accounting
firms. To ensure auditor independence, any non-audit services being provided to
an audit client require pre-approval by the company’s audit committee. In
addition, the audit partners must be rotated. The SOX Act requires the
principal chief executive officer and the principal chief financial officer to
certify to the accuracy of periodic reports filed with the SEC, subject to civil
and criminal penalties if they knowingly or willfully violate this
certification requirement. In addition, under the SOX Act, counsel is required
to report evidence of a



 



12
















Table
of Contents



 



material
violation of the securities laws or a breach of fiduciary duty by a company to
its chief executive officer or its chief legal officer, and, if such officer
does not appropriately respond, to report such evidence to the audit committee
or other similar committee of the board of directors or the board itself.



 



The
SOX Act provides for disgorgement of bonuses issued to top executives prior to
restatement of a company’s financial statements if such restatement was due to
corporate misconduct. Executives are also prohibited from insider trading
during retirement plan “blackout” periods, and loans to company executives are
restricted. The legislation accelerated the time frame for disclosures by
public companies, as they must immediately disclose any material changes in
their financial condition or operations. Directors and executive officers must
also provide information for most changes in ownership in a company’s
securities within two business days of the change.



 



The
SOX Act also increases the oversight of and codifies certain requirements
relating to audit committees of public companies and how they interact with the
company’s independent registered public accounting firm. Audit committee members
must be independent and are barred from accepting consulting, advisory or other
compensatory fees from the issuer. In addition, companies must disclose whether
at least one member of the committee is a “financial expert” as defined by the
SEC and if not, why not. As required by the SOX Act, the SEC has prescribed rules requiring
inclusion of an internal control report and assessment by management in the
annual report to shareholders. The independent registered public accounting
firm that issues the audit report must attest to and report on the
effectiveness of the company’s internal controls. See Part II
“Item 9A. Controls and Procedures” of this Annual Report on Form 10-K.



 



EXCERPTS ON THIS PAGE:

10-K (2 sections)
Mar 6, 2009
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