The Sarbanes-Oxley Act of 2002: Why it is Relevant to the Closely Held Family Business
- Topics:
- Regulatory issues
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- Audit,
- Sarbanes-Oxley Act,
- Sarbanes-Oxley,
- Regulatory Compliance,
- Regulations,
- Policies And Procedures,
- Investment,
- Human Resources,
- Government,
- Genus Resources,
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Overview: In corporate America, Sarbanes-Oxley act of the United States Congress reinforces and expands policies that have maintained confidence in the American capitalistic system for almost seventy years. The Act focuses on management accountability and corporate governance while carefully defining the role of professionals who provide legal, accounting, and other services. Although promulgated for regulation of publicly held companies, the legislation has much to offer for closely held family enterprises. Outside auditors have long been explicitly prohibited by the Act from providing certain services to their audit clients: bookkeeping, appraisal or valuation services, and actuarial services. The new law requires the CEO and principal financial officer of the company to certify each quarterly and annual report. Both must read the report and attest that it is not misleading and that it presents fairly the financial condition of the company. The corporate governance says that for many privately held family businesses the board of directors is a kind of familial club organized more out of legal necessity than to provide effective oversight of management. For others the board may be active but its membership is confined to family members.
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Format: HTML | Date: Jan 2003 | Pages: 1
