Sarbanes-Oxley Act of 2002

Sarbanes-Oxley Compliance in Fixed Asset Management

Sarbanes-Oxley Act White Paper | Sarbanes-Oxley Resources | Sarbanes-Oxley Section 404

The Sarbanes-Oxley Act of 2002 begins a new era in corporate governance. Strict rules to ensure accurate financial reporting put tremendous pressure on public companies to document all internal procedures for gathering and reporting financial results before the fast-approaching deadlines for compliance. Sarbanes-Oxley seeks to reduce corporate financial fraud and mismanagement while providing reassurance to investors.

Under the new regulations, CEOs and CFOs must personally certify the integrity of financial reports, as well as the procedures and systems used to create them. Public accounting firms must also attest to the validity of the financial reports and assessments. Both executives and their accounting firms can be held criminally liable for accounting inaccuracies, making the stakes higher than ever for everyone involved in financial reporting.

Who is affected by Sarbanes-Oxley?

Public Companies

Sarbanes-Oxley currently applies to public companies that are registered with the Securities and Exchange Commission. Most of these companies are headquartered in the United States, but a number of foreign companies with significant operations in the US will also be affected. Some aspects of Sarbanes-Oxley are already in full effect. The requirements of Section 404 must be met by large public corporations.

Private Companies

Although private companies are not required to comply with Sarbanes-Oxley, there are excellent reasons for them to consider its implications. Any private company that aspires to go public will become subject to the act upon filing a registration statement with the SEC in anticipation of an IPO. Additionally, any company that might be acquired by public companies or that has significant business partnerships with public corporations will need to assess the impact of Sarbanes-Oxley on future and current business relationships. Many private companies are already implementing "best practice" aspects of Sarbanes-Oxley.

Nonprofit Organizations

Like private businesses, many nonprofit organizations are interested in applying the best practices principles of Sarbanes-Oxley to their financial procedures. Though Sarbanes-Oxley has not yet been applied to nonprofits, failure to provide adequate visibility into the financial management of nonprofits could result in a similar regulatory environment being enacted in the future. Some states are already considering this type of measure for nonprofit organizations.

FAS and Sarbanes-Oxley

FAS fixed asset management solutions address each of the key areas of internal control for financial software systems. The following white paper was designed to help Best Software customers in public or private companies and nonprofit organizations understand and document the internal controls over fixed asset management provided within FAS solutions, as well as explain the control procedures in place at Best Software over development and testing of the software.

Foundation for Internal Control:
The Fixed Asset Inventory

An accurate inventory of fixed assets is the core of solid financial reporting of corporate assets. Without it, all downstream internal controls can do nothing to resolve inaccuracies created when assets which have been lost, stolen or taken out of services continue to be depreciation and reported.

In order to establish an accurate physical inventory of all fixed assets, a company must ensure that the inventory is conducted using the same method at all locations. Further, it is necessary to have solid procedures in place for reconciling the inventory data against your existing fixed asset records. many fixed asset managers who conduct inventories spend tedious hours surveying corporate assets with a clipboard, followed by re-keying the data into a spreadsheet.

Many companies find that bar-coding each fixed asset as it is placed in service greatly reduces errors in ensuing physical inventories of assets. Inventories can be conducted quickly and efficiently using bar-code scanners.

FAS Asset Inventory | Asset Inventory Services | Compatible Hardware