The Increasing Importance of SOX Reporting
13 March 2017
The Accountancy and Finance market is always subject to a number of variables: the looming threat of Brexit and the new budget for the financial year ahead are just two recent developments that will pose problems for businesses.
Whether a company is a global PLC or a growing SME, no one can say they are immune from the ebb and flow of the financial market.
One such issue arising as a result of the American dominance of the market at present is the insistence that Accountancy and Finance candidates are well-versed in SOX reporting.
This can truly narrow the market: Where six people could formerly be put forward for a position, now only one or two have the technical skills to secure the role.
The UK has, historically, had a healthy trading relationship with the US and Canada, and it’s safe to assume that this partnership will strengthen in the wake of Brexit. Moreover, the Dow Jones has been enjoying a particularly buoyant few months, owing to Donald Trump’s rhetoric about investment and infrastructure.
The balance, therefore, is out of kilter as to what the markets are used to. America is dominant and Europe is hedging its bets. The apprehension surrounding the outcome of a hard Brexit is leading many European companies to trade more safely. America now find themselves bolstered, and in a position of wealth. Therefore, they are recruiting.
With American organisations looking to acquire new employees as they expand their operations on this side of the Atlantic, certain legislations are essential to the everyday business operations.
The Sarbanes-Oxley Act was a piece of American legislation that came in to play in 2002, driven by a wave of financial scandals that exposed the industry as rotten from the inside and ultimately led to the collapse of two financial giants.
It requires that all publicly held companies must establish internal controls and procedures for financial reporting to reduce the possibility of corporate fraud.
With businesses becoming increasingly interconnected through online means, branches of companies on both sides of the Atlantic have a responsibility to ensure that IT systems follow SOX compliance rules. American organisations that have British offices require employees to undertake SOX reporting in order to ensure that these internal controls maintain their effectiveness.
The Sarbanes-Oxley Act places the responsibility and accountability for the tracking of information for activities that have an impact upon financial performance very clearly with those in managerial positions – with some serious jail time and fines awaiting those who do not comply.
Regularity compliance has always been an important part of the cost of running a business. But for the 113 British companies listed on the NYSE and NASDAQ, as well as British branches of American companies, this is now essential. (Although the European Parliament argues that compliance with Sarbanes-Oxley is actually in breach of the Data Protection Act of 1998.)
Even if the American dominance of the market doesn’t prevail for too much longer, there will always be a base for US firms on these shores and, therefore, a need for SOX reporting.
Looking for SOX proficient employees? Or are you skilled at SOX reporting and in need of a new job? Speak to our consultant, Calum Parker.
Written By Callum Parker