The Impact of SOX and QMS/ EMS on Corporate Governance

by Sandford Liebesman, Paul Palmes and John Walz

The Sarbanes-Oxley Act of 2002 (SOX) shares one overriding goal with ISO 9001 and ISO 14001: continual improvement of organizational effectiveness. Indeed, we have found that the most important reaction to SOX is to stimulate an improvement in the governance of public corporations by virtue of its requirements that a
company’s Top Management—in this case, the Chief Executive Officer (CEO) and Chief Financial Officer (CFO)— certify the appropriateness of each financial statement released by the company.

To conform to the financial reporting requirements of SOX, a corporation must ensure its financial management processes, including its internal controls,
are effective and will improve over time. This is similar to what is required in terms of continual improvement of the effectiveness of a quality management system (QMS) for conformity with ISO 9001:2000 and of an environmental management system (EMS) with ISO 14001. Thus, the requirements in all three cases seek improvement in corporate governance. In ISO 9001 and ISO 14001 terms, this is known as Management Commitment, which includes quality and environmental policies and objectives, internal communication and Management Review.

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