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Frequently Asked Questions
When is compliance required?
Who qualifies as a "financial expert" in the new rules?
Exactly, what is a "whistleblower"?
Is there any materiality guidelines for complaints?
Does the Audit Committee need to see all complaints received?
Regarding complaints, what level of detail does the Audit Committee need to see?
What happens if a company isn't in compliance?
Why can't my audit firm handle communications from a "whistleblower"?
What is independence?
How should a company notify employees of their ability to report concerns under SOX?
How should we enable employees to communicate to the Audit Committee?
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Q: When is compliance required?
A: There are many dates, and certainly not all the rules are issued and interpretations clear. And, very importantly, all the exchanges have moved forward with their own set of rules which need to be monitored. We recommend that you check back here often; we'll maintain a list of dates as soon as they've been issued.
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Q: Who qualifies as a "financial expert" in the new rules?
A: Some one who has a thorough education and experience as a public accountant, auditor, a principle financial officer, comptroller or principal accounting officer or from a position involving the performance of similar functions.
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Q: Exactly, what is a "whistleblower"?
A: An employee who provides information, causes information to be provided, or otherwise assists in a investigation regarding any provision of law relating to fraud against shareholders
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Q: Is there any materiality guidelines for complaints?
A: No, there is no materiality qualifier in the legislation. This means all complaints regarding accounting, internal accounting controls or auditing matters reported are covered by the law.
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Q: Does the Audit Committee need to see all complaints received?
A: The Audit Committee needs to see all complaints. Even though this is not stated specifically in the legislation, most - if not all - legal interpretations support this conclusion.
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Q: Regarding complaints, what level of detail does the audit committee need to see?
A: This can vary. For example, immaterial, operational-type incidents can be summarized, and presented as summary data in a time series. More serious situations must be analyzed and presented in detail for appropriate treatment and resolution.
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Q: What happens if a company isn't in compliance?
A: Depending on the section, non compliance penalties range from the loss of exchange listing, loss of D&O insurance to multimillion dollar fines and imprisonment.
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Q: Why can't my audit firm handle communications from a "whistleblower"?
A: INDEPENDENCE
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Q: What is independence?
A: Independence has 2 definitions: one as it pertains to the audit firm and one as it pertains to a member of the Audit Committee.
The audit firm can not perform a service that is a subject of the audit itself.
Audit Committee Members (other than their capacity as a member of the Audit Committee, the board or other board committee) may not accept any compensatory fees or be affiliated with the issuer or a subsidiary
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Q: How should a company notify employees of their ability to report concerns under SOX?
A: We believe that companies should (1) post signs on bulletin boards at all locations where other legal notices, such as The Minimum Wage is posted, and (2) place notices and links on company intranets.
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Q: How should we enable employees to communicate to the Audit Committee?
A: We think companies should not limit the media. Ideally, employees can phone, email, fax or use the postal service. Particularly for companies with employees in many countries where the use of media, other than voice, help control the costs of compliance.
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