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The UK SOX act is on its way, and it could mean big changes for a lot of businesses and organisations. The act will mandate certain practices in financial record keeping and reporting to protect investors from corporate fraud.
Originating in the United States as the Sarbanes-Oxley Act in 2002, the UK version of the law will involve strict requirements for improved financial disclosure and internal control assessment. It will include new guidelines for corporate governance and a stronger emphasis on auditor independence. UK SOX will also require officials of the CEO or CFO level to personally attest that their company’s internal controls are adequate to ensure all their financial statements are reliably accurate.
The UK SOX proposals were laid out in the Department for Business, Energy and Strategy (BEIS) consultation paper, titled ‘Restoring Trust in Audit and Corporate Governance’.
Who is Affected by UK SOX?
The UK SOX Act will have a far-reaching effect. On the face of it, it mainly affects any organization that trades on the Financial Times Stock Exchange (FTSE), as their compliance with SOX will be a requisite for trading.
However, it is not just FTSE350 firms who should be implementing SOX-compliance programs. It is still being debated as to who exactly will be forced to comply with the UK SOX Act. One perspective is that it should only apply to premium-listed companies and another that it should apply to all quoted companies. There is also debate as to whether all public interest entities should be included.
Instructively, the original proposals in the BEIS consultation paper acknowledged the relevance of privately-owned companies in the conversation, recommending that they should also adhere to the same high standard of financial reporting as listed companies.
This all means it is likely that most companies will have to apply UK SOX financial disclosure and internal control assessment recommendations to some degree, once they have been finalised.
What UK SOX Means for Business
The UK SOX Act is projected to be much less impactful than the US version, and many businesses and organisations will likely already be adhering to the finalised recommendations. The proposed attestations have been well received by commentators and should add an extra layer of security with such top officials now being personally liable for the accuracy of their attestations.
Some businesses may need to tidy up their financial reporting and internal control assessment procedures, with a reliable accountancy and finance recruitment agency able to identify the ideal candidates for such important projects. This will clearly be especially relevant to corporations trading on the stock market, but the UK SOX Act seems to be steering towards a general overhaul to improve reliability and transparency across the wider business world.
If your business needs new talent for accountancy and finance projects such as compliance with the UK SOX Act, email sue.wallis@sewellwallis.co.uk for more information.
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