The Sarbanes–Oxley Act and it's effect upon business


1

I have heard several times that the Sarbanes–Oxley Act had a profound affect upon how business is performed in the US, but no one has ever explained to me what all the fuss is about. Can you? How, in particular, does it affect a start-up company?

Regulation

asked May 19 '11 at 21:33
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John Berryman
388 points
  • Really? I thought it was pertinent. After all, I don't want my startup to be a startup forever. – John Berryman 9 years ago
  • I think that clearly this is not a "start-up" question @John Berryman -- but it is a darn tootin good question, especially for this board with a slight edit. There are some impacts on start-ups of the Sarbanes-Oxley Act. Why not ask that question? – Joseph Barisonzi 9 years ago
  • Ok then, I'll bite. – John Berryman 9 years ago

2 Answers


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It depends on the types of services you offer and who uses those services. As a start-up it's easy to think this is N/A for you but if any of your clients are publicly traded or use your products/services as part of their work for their clients who are publicly traded you may find that this impacts you as they will be asking for things like audit-trail capabilities, etc.

answered May 21 '11 at 22:38
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Jmp
191 points
  • +1 for answering from the viewpoint of a startup. – Kenneth Vogt 9 years ago

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Senior management of publicly-reporting companies has to certify that the financial statements are correct now, due to Sarbanes-Oxley. This requires massive audit expenses (to be sure that the financial reports are right), and there is significant liability for those executives if the financial reports are wrong. So a public company can either spend a ton of money on audits or not be public. It's a lose-lose situation.

answered May 21 '11 at 21:48
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User6492
1,747 points
  • Although I understand the distinction between a start-up and a public company (see discussion in question comments), I really want my start-up company to become public at some point! I think this is the answer I was looking for. – John Berryman 9 years ago

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