When should I have to fully comply with SOX?

If you are a non-US subsidiary of an US public company, you need to follow the rules of SOX 404 for the first time in your annual report of the accounting year which ends after April 15, 2005. If you are listed at an US stock exchange, it should be the first accounting year which ends after June 15, 2004.

What is the framework of audit in China?

How much does normally SOX compliance cost?

This depends on each special case and can not be said in general. But the costs can be significant: US major companies declared they invested four million dollars on average for documentation only. In China, the cost can be relatively low since the labor cost in China is as expensive as that in the US or Europe. Professionals equipped with international best practice […]

Why should I implement SOX?

Firstly, if you are affected by SOX as described above and your reporting doesn’t comply with SOX, you may suffer from criminal punishment. Secondly, integrating an effective internal control system in your financial reporting can help you to reduce risks of asset loss. Thirdly, financial reports with sound internal control system in place can enhance the confidence of investors and […]

What is the framework of audit in China?

My company is not American. Will I be affected by SOX anyway?

If you are a non–US subsidiary and your parent company is enlisted at an US stock exchange you have to comply with SOX 404; if you are a US subsidiary of a non–US company and your parent company is not listed in the US, you don’t have to comply with SOX.

Who is affected by SOX?

The affect of SOX is pervasive. All companies listed at US stock exchange should comply with SOX.Hence, all stakeholders of these companies are significantly affected, including boards, management, auditors, brokers, dealers, investment bankers and financial analysts, etc.

What is the framework of audit in China?

What is SOX 404?

Probably the most important section of the Sarbanes-Oxley Act of 2002 is Section 404. It requires the implementation and documentation of an adequate internal control system in the company. All reporting related internal controls should refer to this section. The management of the company has to value the usefulness of its internal control system and has to publish the results together […]

What are the implications of SOX for a companies management?

According to SOX, the management of a US public company will personally be liable for the correctness of the financial reports and the effectiveness of its internal control. Each annual report on Form 10-K must contain a statement of the management’s responsibility to establish and maintain adequate internal controls and procedures for its financial reporting and a […]

What is the framework of audit in China?

What are the specific titles of SOX and what do they deal with?

Title I: Public company accounting oversight board (“PCAOB”): Definition of the organization and the field of functions of the oversight board over the reporting of the US enlisted companies. Title II: Auditor Independence: Regulations about the auditor’s independence including services not allowed to perform by auditors. Title III: Corporate Responsibility: Explanations and enlargement of the responsibilities of the companies like e.g. regulations about the […]

What is SOX?

The Sarbanes-Oxley Act of 2002 (“SOX”) is a sweeping American law adopted in 2002 after the accounting scandals of Enron and WorldCom. Its aim is to make the reporting of companies more transparent and reliable mainly by setting up new accounting, auditing and controlling rules in order to enforce corporate governance. The final goal is to restore the confidence […]