Use Management Tools to Mitigate Risk From SOX

by Sandford Liebesman

What is the biggest concern for Top Management in US
companies today? It is risk, which The American Heritage Dictionary of the English Language (Houghton
Mifflin Co., 1981) defines as “suffering harm or loss; danger; hazard; a factor, element or course involving uncertain danger”.

In today’s business environment, Top Management’s greatest concerns are forms of risk other than the danger of a terrorist attack—financial risk, competitive risk and the newest risk, the Sarbanes-Oxley Act of 2002 (SOX). What is SOX and how does it affect the
management of public companies? According to this Act of Congress, the Chief Executive Officer (CEO) and Chief Financial Officer (CFO) of a public company in the United States now have to certify the appropriateness of each financial statement that company releases. Failure may mean civil suits or even jail time.

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