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Does it make any difference in terms of controls byimplementing anyone of them.
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 ..
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.
SOX is rule based approach for Corporate Governance principals.
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].
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
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..
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.
SOX is a tool which can be used to ensure corporate governance
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
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’.
