As a senior manager at Ernst & Young LLP in Los Angeles and a chief financial officer at Pacific Office Properties Trust, Inc., in Santa Monica, James Kasim had oversight responsibilities for proper corporate accounting. His duties included ensuring compliance with the provisions of the Sarbanes-Oxley Act of 2002.
The act, principally authored by Senator Paul Sarbanes and Representative Michael Oxley, set new requirements for governance and accounting practices of publicly traded companies, to be in place by 2006. It also established an agency, the Public Company Accounting Oversight Board, to deal with corporate accounting standards. Passage of the law reflected concern over several accounting scandals.
Covered by the act are all publicly held companies in the United States, their subsidiaries, and firms not based in the U.S. but engaged in business there. In certain cases, the law is applicable to initial public offerings.
Companies must report on the effectiveness of their internal auditing to the Securities and Exchange Commission. External parties must also examine the company's financial statements and auditing. Reports must contain data that is attributable to a company source; revisions to the data or software must also be explained.
Noncompliance or inaccurate reporting can result in legal penalties of up to $5 million and 20 years in prison.
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