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What is the difference between SOX and corporate governance?

Does it make any difference in terms of controls byimplementing anyone of them.

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تم إضافة السؤال من قبل Rashid Mehmood FCCA , Finance Manager , Al Ghaith Industries
تاريخ النشر: 2013/08/26
Adil Ali
من قبل Adil Ali , Accounts Officer , Falcon Holdings LLC

Corporate governance is about how to control co its neds,eds,chariman and their sturucture .it includes all those things which is used to control effective running of the bussines. Their are two main aproaches to corporate governace rules based which is known as Subanes oxley act which is based on United stated co's and the other one is combined code which is principal based approach to corporate governance and is based on Uk companies .Although rules based approach such as subanes oxley act (Sox) is far more harsh than combined code ..

Muhammad Iqbal
من قبل Muhammad Iqbal , Senior Finance Manager , Selfologi

In short, Corporate Governance and Sarbanes Oxley to some extent have similarity. The major difference is SOX is rule based approach and Corporate Governance is principles based approach. 

 

SOX compliance is compulsory for the entities listed in US. 

On other hand CG compliance is based on principles and applicable to the other demographic industries. 

 

 

Amr Ebeid
من قبل Amr Ebeid , Financial controller , Majan University College SAOG www.majancollege.edu.om

SOX is rule based approach for Corporate Governance principals.

Menerva Melad
من قبل Menerva Melad , Account Executive, Key Accounts , Graphic Home Company

Corporate Governance is how an organisation/company seeks to determine how it will achieve its agreed objectives by establishing an appropriate framework of arrangements designed to give reasonable assurance. A key element of the appropriate framework of arrangements is the management of risk and the cost effective allocation of resources on a risk prioritised basis [NB hence the '3 lines of Defence Model' relating to ERM/GRC Frameworks].

KEITH JOHNSTON
من قبل KEITH JOHNSTON , Various from Senior Internal Auditor to Internal Audit Manager to ERM/GRC Consultant , Both Public & Private Sector

Corporate Governance is how an organisation/company seeks to determine how it will achieve its agreed objectives by establishing an appropriate framework of arrangements designed to give reasonable assurance. A key element of the appropriate framework of arrangements is the management of risk and the cost effective allocation of resources on a risk prioritised basis [NB hence the '3 lines of Defence Model' relating to ERM/GRC Frameworks].

One of the risks that organisations seek to manage is that relating to 'Financial Reporting Risk' - i.e. the risk that financial statements do not accurately reflect the status of an organisation's financial activities / performance / status.  If this risk is not properly managed the organisation's future performance and ability to maintain operations may be jeopardised. There have been a number of well publicised cases where large corporate entities have been found not to have followed recognised Accounting Standards in the preparation of their financial statements/reports. Some of these involved fraud / mis-appropriation of corporate funds which were not always immediately detected by External Auditors. SOx was introduced not only to help prevent the re-occurence of such instances but to provide a more sound and evidence based system of providing asssurance that Financial Statements / Reports are reliable, fair and accurate.

A large number of companies decided that, since they needed to establish SOx compliant reporting systems to maintain their stock exchange share listings, they would leverage the costs of setting up the necessary arrangements by implementing Enterprise Risk Management frameworks addressing all significant risk.

Hope this helps to put SOx into proper perspective.

K R Johnston. MBA, CPFA, CMIIA

 

 

FAREEHA ASIF
من قبل FAREEHA ASIF

Corporate Governance is the overall framework , policies and procedures to govern a corporate by following financial and non-financial standards and policies in order to present a prescibed or standard corporate culture and its limitations..

Abdulmalik Salau
من قبل Abdulmalik Salau , Student , UUM

Corporate governance deal with the various mechanisms available to reconcile the interest of shareholders and management. SOX are guiding principle to be followed to ensure sound corporate governance practise. 

Muddasir Farooq
من قبل Muddasir Farooq , Finance Controls and Reporting Manager , Arabian Air Conditioning Company (Carrier Saudi Arabia)

SOX is a tool which can be used to ensure corporate governance

Mohammed Thiab
من قبل Mohammed Thiab , Founder / Chief Consultant , MV Consulting

Corporate Governance  is the general concept/model "umbrella" under which is SOX is the American version of it for public traded companies following the Enron Scandal ...  Sarbane and Oxley are the two Congressmen behind this litigation.. 

 

There are other forms of corporate governalcne depending on the industry ... Basel III accord for banking, HIPAA for health-care, ....  and there are specific specal versions of corporate governance for "private" companies too if the owners/shareholders want to to adopt corporate governance

Adnan Ameen Bakather
من قبل Adnan Ameen Bakather , Founder & Managing Director , Consult & Perform

Simply, the difference is that the SOX are American Act enacted after the Enron scandal in USA. It contains sections about internal control, accounting profession, auditing profession as well as governance of corporation. In comparison, CG or corporate governance per se, is usually a guidelines or code NOT necessarily enacted by law. Thus, they differ in term of compliance in which SOX is compulsory whereas the CG is ‘comply or disclose’.