Pages: 3 (504 words) /
Published: Sep 15th, 2013
The Sarbanes-Oxley Act of 2002 is an act passed by U.S. Congress in 2002 to protect investors and the general public from the possibility of fraudulent accounting activities by corporations. The Sarbanes-Oxley Act authorized strict modifications to improve financial disclosures from corporations and to prevent accounting fraud. This law was passed after a couple of big the accounting scandals like Enron, Tyco, and WorldCom shook investor assurance in financial statements and required an overhaul of regulatory standards. The act is administered by the Securities and Exchange Commission, which sets deadlines for compliance and publishes rules on requirements. It is not a set of business practices and does not specify how a business should store records; rather it tells more which records are to be stored and for how long in case of hearings.
The legislation not only affects the financial side of corporations, it also affects the IT departments whose job it is to store a corporation's electronic records. The Sarbanes-Oxley Act states that all business records, including electronic records and electronic messages, must be saved for "not less than five years." The consequences for non-compliance are fines, imprisonment, or both.
Sarbanes-Oxley contains three rules that affect the management of electronic records.
The first rule deals with destruction, alteration, or falsification of records.
The second rule defines the retention period for records storage. Best practices indicate that corporations securely store all business records using the same guidelines set for public accountants.
This third rule refers to the type of business records that need to be stored, including all business records and communications, including electronic communications.
It has its advantages and disadvantages. The first advantage is that it tremendously reduced disclosure process cost, enhance internal controls management