Home
>
Tax
>
Taxing Overseas Firms for SOX Compliance

Taxing Overseas Firms for SOX Compliance

The Sarbanes-Oxley Act, also called the Public Company Accounting Reform and Investor Protection Act of 2002 was signed into law on July 30, 2002 by President Bush. In the aftermath of Enron, Arthur Andersen, Global Crossing, and WorldCom, SOX promises greater corporate accountability and transparency. Named after Senator Paul Sarbanes and Representative Michael G. Oxley, SOX focuses on the importance of ethical behavior in corporate governance-across the United States and now?overseas.

All countries have government-required laws like Sarbanes Oxley. In the UK, it's the "Combined Code on Corporate Governance," in The Netherlands it's the "Code Tabaksblatt," Germany has a "Bilanz Reform" and a "Bilanz Kontroll Gesetz." But then, why do we need SOX overseas since we already have the required laws? It's because companies with U.S. headquarters must ensure that all foreign outposts meet federal standards. This is the major cause of concern in the management and accounting circles. According to some experts, the Sarbanes Oxley Act might have dictated convoluted rules and regulations on the U.S. businesses. While the rules are concrete ideologies that prevent accounting scandals, the constant flux in the policies confuses businesses around the globe.

SOX compliance by vendors and business partners outside the U.S. is a frightening task. The risks and complications involved in enforcing the regulations for multiple firms around the world are enormous. The U.S. firms should keep themselves abreast of the data operations and data management followed by overseas vendors. This complicates the case further as the data should be integrated in financials or entered in balance sheets. Cumbersome processing of data would step up IT-related expenses.

The global impact of SOX is tremendous. At the moment, the UK Big Four firms are feeling SOX repercussions in their consulting sectors. big4.com -a website for global Big4 alumni- receives periodic updates on the latest news and trends at the Big Four firms. The Big Four in UK reportedly lost GBP250 million in consulting fees since 2002-a direct outcome of Sarbanes-Oxley Act. Among the Big Four firms, PricewaterhouseCoopers faced a huge decline in their consulting fees. Causes for this decline can be attributed to:

? The increased cost of compliance that usurped consulting budgets.

? Independence restrictions in Sarbanes-Oxley have restrained companies from utilizing their auditors for many consulting services.

There is an apparent role reversal in consulting fees and audit services. If consulting fees have declined, audit fees have considerably increased. A whopping 30% increase in Big Four audit fees has been observed over a period of two years. This spike does not compensate for the revenues lost for consulting. Consulting was the major strength of the Big Four in the UK. But, in the present conditions, the significant decline in consulting fees clearly demarcates the performance of the Big Four in the UK.

According to a survey by an European firm, many overseas firms with their shares listed in the U.S. were not ready to meet the deadlines of Sarbanes-Oxley. Since European firms already have specific regulations, SOX compliance is extremely difficult. Some overseas firms have been attempting to get delisted from the U.S. stock markets since SOX's inception. Foreign firms about to get listed on overseas exchanges are also resisting to get listed in the U.S. These problems would take toll on the U.S. market performance and economy. But, the exit of foreign firms from the U.S. exchanges is not that easy. As per SEC guidelines, foreign firms holding 300 or more shareholders in the U.S. cannot delist from the U.S. exchange where they trade.

In the light of these problems, the Securities and Exchange Commission-in its bid to offer sustained flexibility-started modifying rules for overseas firms listed in the U.S. The SEC would facilitate foreign firms to delist their securities that are traded on the U.S. exchanges. Modifying SEC rules to accommodate European firms would create a state of unrest among the American managements.

The SOX compliance should be an "all-encompassing" formula-that which enables governments and managements worldwide to function efficiently and in rhythm. A level headed approach to weed out this disconcert would improve the situation.

Hi. I am Neil and am a big4.com Alumni Member. I have been writing articles since my college days. Would love to interact and share my articles with other writers.

quick home cleaning Arlington Heights ..

In The News:

Kurt the CyberGuy offers some easy fixes if you're struggling with Windows 11. PC users have reported slow performance, Wi-Fi problems and other issues.

In response to infostealer activity increasing 500% in a year and harvesting 1.7 billion user credentials, the CyberGuy offers four ways to stay safe from infostealer malware.

Looking Glass has developed a 27-inch light-field display that allows you to see digital objects in three dimensions without headsets or glasses.

A CCTV video purportedly originating from a Chinese factory shows a robot appearing to lash out at two men in an unexplained incident.

After years of delays, travelers must now show a REAL ID, a valid passport or another federally approved ID to travel. May 7, 2025, is the deadline.

Driverless tractor-trailers are already traveling on Texas roads, raising questions about safety, reliability and the future of trucking.

Tech expert Kurt “CyberGuy" Knutsson reveals that a new AirPlay bug lets hackers take over Apple devices via Wi-Fi with no clicks needed.

This Mother's Day, gift Mom tech gadgets that simplify life, connect and show love. Tech expert Kurt “CyberGuy" Knutsson offers some ideas.

Tech expert Kurt “CyberGuy" Knutsson reports that Tesla owners are facing threats as hackers weaponize leaked data. Are you next?

Kurt “CyberGuy" Knutsson discusses how a paper pill bottle could revolutionize pharmacy packaging and cut plastic waste drastically.

The private information of about 4 million people was exposed after a major data breach involving VeriSource Services, a Texas-based HR firm.

Archer Aviation and United Airlines have teamed up to offer a more environmentally friendly way to skip New York City's traffic jams and reach your destination more quickly.

Healthcare company data breaches have leaked personal data of millions of people in recent years, and the CyberGuy offers ways to keep your information safe.

Stay up to date on the latest AI technology advancements and learn about the challenges and opportunities AI presents

Police around the world are adding robots powered by artificial intelligence to their departments, and Thailand has emerged as one of the key players.

Kurt "CyberGuy" Knutsson explains five cleanup hacks — a few smart automations and tools — to declutter your technology and keep things running smoothly.

Kurt the CyberGuy breaks down whether it’s better to remove your personal information from the web yourself or use a data removal service.

Google’s scam detection features, powered by artificial intelligence, are a significant step forward in safeguarding Android users from fraud.

The FBI has issued a warning that scammers are impersonating doctors, police and banks using spoofed numbers as "smishing" texts surge nationwide.

Communities with unreliable internet service stand to gain after Amazon's Project Kuiper launched its first full batch of satellites into orbit April 28.

Tech expert Kurt “CyberGuy" Knutsson says unsubscribing from spam might actually backfire. Learn when to avoid it and stop junk effectively.

Tech expert Kurt “CyberGuy" Knutsson talks about how the first nonstop beating heart transplant, called zero ischemic time, at Taiwan hospital changes surgery.

Kurt “CyberGuy" Knutsson: FBI warns of "time-traveling" hackers.

Kurt “CyberGuy" Knutsson talks about a soft, vine-like robot called SPROUT that aids safe survivor rescues in collapsed buildings.

Health insurance giant Blue Shield of California confirmed it had been sharing private health data of 4.7 million users with Google for three years without even realizing it.