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SOX - Staying Current
Recent Regulatory Movement
On July 21, 2010, President Obama signed the financial regulatory reform bill (Dodd-Frank Act) into law. One immediate effect of the bill was the permanent exemption of Section 404(b) of the Sarbanes-Oxley Act of 2002 (SOX(b)) for issuers with market capitalisation of less than $75 million. Despite SOX rules being in place for many years now, the current economic environment hasn't made it any easier on the tax function, either, as tax departments have had to grapple with the impacts of financial valuation and bad debt concerns, goodwill impairments, and other write-downs borne out of the market conditions. Consider, also, the unprecedented rate of financial statement change occurring in the U.S. right now, with the Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) both working diligently on a set of convergence projects that affect everything from the most fundamental of areas, such as revenue recognition, to more technical yet widespread areas, such as lease accounting. Taxand US examines the impact of financial reporting the tax function in companies may have.
Many tax departments have not looked at their documented process in some time, as often, it isn't until crisis hits they need to act. Yet with the stresses imposed by the economy on staffing levels and financial data nuances, risk remains high. Currently, there has been numerous changes occurring to accounting standards in the US and companies need to check whether they're equipped to address the future tax impacts. When heading into another year-end financial statement audit, companies may need to evaluate whether the ability of their people, processes and technology can deal with the stresses of any tax reporting system. Maybe they'll find that an addition of one or two "best practices" or a simple fresh look at the current processes and procedures will be the mitigating factor they need to successfully navigate another financial reporting season.
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