From: Subject: Online File W1.3: The Sarbanes-Oxley Act Date: Sun, 27 May 2007 20:07:52 +0430 MIME-Version: 1.0 Content-Type: text/html; charset="iso-8859-1" Content-Transfer-Encoding: quoted-printable Content-Location: http://higheredbcs.wiley.com/legacy/college/turban/0471705225/web/online/ch01/w1_3.html X-MimeOLE: Produced By Microsoft MimeOLE V6.00.3790.3959 Online File W1.3: The Sarbanes-Oxley Act

Online File W1.3

THE SARBANES-OXLEY ACT

Passed in the wake of the Enron and WorldCom accounting scandals, = the=20 Sarbanes-Oxley Act stipulates procedures for improving corporate = reporting, such=20 as requiring CEOs to certify the accuracy of financial statements and=20 prohibiting a firm=92s outside auditors from engaging in any activity = that might=20 conflict with their auditing responsibilities. The Securities and = Exchange=20 Commission in May 2003 adopted rules implementing Sarbanes-Oxley=92s = section 404,=20 which requires that annual reports contain a statement of management=92s = responsibility for establishing financial controls and that outside = auditors=20 testify to the adequacy of a company=92s controls and reporting = procedures.

To comply with the act can be very costly, and IT tools can help. = One of=20 these tools, called Horizon, is being offered by J.P. Morgan. This = Web-based=20 software identifies and manages operations risk, a catchall for the=20 unpredictable calamities that can befall a company, from fraud to = =93acts of God=94=20 to computer glitches. Through a set of self-assessment tools, Horizon = enables=20 companies to gain a clearer picture of their operations risks and the = steps=20 needed to control them. Horizon also provides a practical solution to = the=20 challenges of complying with the requirements of the Sarbanes-Oxley Act. = The=20 product helps companies establish sound practices in the areas of = financial=20 reporting, conflicts of interests, corporate ethics, internal processes, = and=20 accounting oversight.