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February 15, 2012
The Sarbanes-Oxley Act of 2002, more commonly referred to as Sarbanes-Oxley, Sarbox, or SOX, is a federal law that created and enhanced standards for all U.S. public company boards, management, and public accounting firms. The bill was enacted as a reaction to a number of major corporate accounting scandals, including those within Enron, Tyco International, Adelphia, Peregrine Systems, and WorldCom. These scandals shook public confidence in the nation\’s securities markets, and cost investors billions of dollars when the share prices of affected companies collapsed.
Named for its sponsors, U.S. Senator Paul Sarbanes and U.S. Representative Michael G. Oxley, SOX contains 11 sections that range from additional corporate board responsibilities to criminal penalties, and requires the Securities and Exchange Commission (SEC) to implement rulings on requirements to comply with the law. The act also created a new agency, the Public Company Accounting Oversight Board (PCAOB), which is charged with overseeing, regulating, inspecting, and disciplining accounting firms in their roles as auditors of public companies.
Those who opposed SOX claim it has reduced America\’s international competitive edge against foreign financial service providers, saying SOX introduced an overly complex regulatory environment into U.S. financial markets. Proponents say that SOX has improved the confidence of fund managers and other investors with regard to the veracity of corporate financial statements.
Sarbanes-Oxley had an effect on the appraisal industry as well. Section 201 (g) (3) of SOX prohibits auditors from providing appraisal or valuation services, which means that in order to have appraisals performed and not be in violation of SOX, companies must be sure to use licensed and USPAP-compliant appraisers.
As a reminder, with our acquisition of Present Value LLC, a worldwide appraisal and advisory company, EquipNet now possesses expanded Certified Machinery and Equipment (CMEA) capabilities. For more information, check out the EquipNet Asset Accuracy Resource Center or email us today at [email protected].
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