Friday, 18 November 2011

Taxing Foreign Companies For SOX Compliance

The Sarbanes-Oxley, also known as Company Accounting Reform and Public Protection Act 2002 was enacted investors July 30, 2002 by President Bush. In the wake of Enron, Arthur Andersen, WorldCom and Global Crossing, SOX promises greater accountability and transparency. Named after Senator Paul Sarbanes and Representative Michael G. Oxley, SOX focuses on the importance of ethical behavior in corporate governance in the United States and now ... and abroad.

All countries have laws the government's commitment as Sarbanes Oxley. In Britain, the "Combined Code of Corporate Governance" in the Netherlands is the "Code Tabaksblatt," Germany has a "Bilanz reform" and "Kontroll Bilanz Gesetz". So why do we need SOX overseas since we already have laws needed? This is because companies headquartered in the United States must ensure that all foreign outposts meet federal standards. This is the biggest concern in the management and accounting circles. According to some experts, the Sarbanes Oxley Act has dictated the complex rules and regulations of the U.S. companies. Although the rules are concrete ideologies that prevent accounting scandals, the steady flow in the policies confuses businesses around the world.

SOX compliance by suppliers and business partners outside the United States is a daunting task. Risks and complications involved in implementing the provisions of a number of companies around the world are enormous. U.S. companies should keep abreast of the activities and information after the foreign sellers. This further complicates the issue because the data must be taken into consideration the financial and budgetary data. Cumbersome processing of data should be intensified IT costs.

Overall impact of SOX is huge. Currently, the Big Four in the UK are familiar with the implications of SOX for their areas of expertise. BIG4 global alumni - receives regular updates on the latest news and trends in four major companies. Big Four UK reportedly lost GBP250 million in consulting fees since 2002, a direct result of the Sarbanes-Oxley. Of the four large firms, PricewaterhouseCoopers faced a huge decline in their advice. The reasons for this decline may be due to:

· Compliance with the budgets of expensive counseling abused.

· Constraints independent of the Sarbanes-Oxley have restrained companies from using their accounts for the many consultation.

There is a clear role reversal in consulting fees and audit. If consulting fees have declined, audit fees significantly. A huge 30% increase in Big Four audit fees has been observed over a period of two years. This increase does not compensate for loss of income for the consultation. Consulting was the great strength of the Big Four in England. But under current conditions, the significant decrease in consulting fees to clearly define the performance of four in England.

According to a study by the European companies, many foreign companies whose shares are traded in the United States were not ready to meet deadlines and the Sarbanes-Oxley. Since European firms already in compliance with specific regulations, SOX, it is extremely difficult. Some foreign companies have tried to get the price of the stock market in the United States since the beginning of the SOX. Getting foreign companies listed on foreign stock exchanges are also contrary to get listed in the United States, these problems would take a toll on the performance of the U.S. market and the economy. But the release of foreign companies in the United States is not easy. What instructions per second, foreign companies that hold at least 300 shareholders, the United States can not be removed after the American Stock Exchange, where trading.

When the light of these problems, the Securities and Exchange Commission in its efforts to provide continuous flexibility to begin to change the rules of foreign companies listed on the U.S. SEC would facilitate foreign firms to delist their securities that are traded on the American Stock Exchange. Change the SEC rules to include European firms would create a state of unrest in American leadership.

SOX compliance is "all inclusive" formula that allows governments around the world, and consistently operate efficiently and rhythm. Level leads to an approach to cut confuses the situation would improve.