The Sarbanes Oxley Act - Essay Example

? Difference in Work for Information Technology Management with Sarbanes Oxley Act Year In the recent years Information Technology has played a vital role in the success or loss of any organization. The company’s work needs to be successfully aligned with the standards set by the government. One of such laws is Sarbanes Oxley Act, which was announced and passed in 2002. It was imposed mainly to the corporate firms with the objective to revive the clients and people trust on these organizations. This paper will explain the Sarbanes Oxley act and its effects on the organizations. The major focus is on the role of the Information Technology managers and how they are responsible to reengineer and manage the business processes to implement the Sarbanes Oxley act, with the key issues that really need to be addressed by the managers to be successful in implementing the act. The Sarbanes Oxley (SOX) Information technology controls play a sound role in business and accounting. These controls are activities especially designed to ensure that organizations business objectives are met. These controls are majorly related to data integrity and availability with the IT functions management. Information Controls get importance in United States after the release of Sarbanes-Oxley act in July 2002. The act was passed in response to the business and accounting scandals of USA corporate firms. This act provided new standards to the corporate firms which explicitly define the laws which are mandatory to be followed when working with financial data, interactions in corporate culture and audit controls that assure the accuracy of financial statements. Compliance with the laws should not be discouraged; it should be handled parallel to other legislative laws with appropriate analysis. Sarbanes Oxley Act The act affects American corporate firms in terms of what the management should do to ensure the auditor’s are independent of their clients. This act also defines roles and procedures that will be used to implement Company Accounting and Financial work. The act also defines the standards that will be used to develop an audit committee and to define their work that will be followed by the auditors. Effects of Sarbanes Oxley Act After the implementation of Sarbanes Oxley a big change come which affected the corporate companies and its management financially and legally (Tricia Bisoux, July/August 2005). Under the Section 404 the senior management will be responsible for every pros or cons in the financial statements and audit reports (Sans Institute,2005). These acts were defined when American company Enron personnel’s refuses to accept the discrepancies in their company’s financial reports. As a result this legislation meant a lot to the companies of USA. Responsibility of Information Technology Managers Information Technology has become an integral part of every organization which ranges from small private organizations to big multi-national or corporate firms. They will surely need an Information Technology department with the efficient management who will be managing the business process alignment with the business objectives. To attain this goal Organizations Company hires senior management in the IT, who will act as a sole responsible for the business objective. As Sarbanes Oxley focus majorly on the laws that has become the mandatory part for every public trade company, these IT Managers will be serving as the chief role in accomplishing the act. They will need to ensure the compliance of the every function with the established principles by the senior management. What the IT Managers are required to reengineer the business processes in parallel to the laws to implement the act effectively and in different way. Every process should ensure compliance of standards. In this regards the most significant role is being played by the Manager himself. To fully implement the Sarbanes Oxley law they need go for the change of senior management and board of director’s way of working and views. He is accountable to change the working cultures. He has to redefine the business policies that are as according to the setting standards. In this modern era what companies are going towards is the maximum use of technology for transparency in working functions, but when implementing Sarbanes Law the most important factor is to have provided evidences against each action that could affect the financials of the company. So this could be considered as going back towards the manual work as well. But this could help in having accuracy while auditing the financial statements. The Managers also need to implement more restricted internal controls that compliance with the laws. This could be achieved by increasing the functions and number of controls for each accounting period. The implementations of Sarbanes Oxley laws start from identifying the processes where the managers need to be more firm and focused for financial statements and accounting numbers. They also need to reengineer the business processes which are majorly interlinked with the basic financial numbers. Not only this IT managers are the one who are accountable for every transaction under every process to make it transparent and get it approved by the concerned supervisors for the later proves. All this could only be achieved if the managers are centrally focused on the management skills of entire working of organization. Conclusion Sarbanes Oxley law indeed has been a key function that enables the corporate firms to again achieve the trust of its client. This act facilitates the clients to get transparent information. As there are so many plus that was achieved once firms started to implement the act. But there are still some unanswerable questions that are affecting the organization (Osmond Vitez, 2002). The most important areas are as under: 1. Increased internal controls: these are becoming basis for delay in closing time of accounting periods. 2. Segregation of duties: within a single process that decreases the chances of frauds. 3. Increases regulations: As the act describes and limits the company to be more firm in performing the financial solutions and activities. This is burdening the companies to increase their investments on their business. Sarbanes Oxley is a very effective measure that is now a mandatory term in running corporate firms. These made a controlled and transparent availability of data. References Tricia Bisoux, July/August 2005. The Sarbanes Oxley Sans Institute, 2005. Information Security and Section 404 of the Sarbanes-Oxley Act Osmond Vitez, 2002. 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