Corporate-reform act impacts RIM professionals. (News, Trends & Analysis).
The law attempts to address many of the issues raised by the Enron and Arthur Andersen scandal. It creates an independent oversight board to monitor accountants auditing publicly traded companies, toughens penalties against executives who commit corporate fraud, and increases the Securities and Exchange Commission's (SEC) budget to aid auditors, investigators, and defrauded investors. It also addresses auditor independence; corporate responsibility at publicly traded companies, financial disclosures of publicly traded companies, and conflicts of interests of financial analysts. Sarbanes-Oxley also creates protections for "whistleblowers" at publicly traded companies and imposes new criminal penalties relating to fraud, conspiracy, and impeding investigations.
It establishes harsh penalties for wrongdoing not only by accountants and corporate officers, but also by anyone "who corruptly alters, destroys, mutilates, or conceals a record, document, or other object, or attempts to do so, with the intent to impair the object's integrity or availability for use in an official proceeding" or "otherwise obstructs, influences, or impedes any official proceeding, or attempts to do so."
The Act also amends Chapter 73 of title 18 of the U.S. Code dealing with obstruction of justice within the context of crimes and criminal procedure. These amendments, which may apply to any person who violates the new sections to Chapter 73, impose and include:
* A fine and/or imprisonment of not more than 20 years for "whoever knowingly alters, destroys, mutilates, conceals, covers up, falsifies, or makes a false entry in any record, document, or tangible object with the intent to impede, obstruct, or influence" an investigation or proceeding by a federal department or agency or any case filed in bankruptcy court.
* A fine and/or imprisonment of not more than 10 years for the failure of any accountant who conducts an audit of a publicly traded company to "maintain all audit and review workpapers for a period of five years from the end of the fiscal period in which the audit or review was concluded."
* "Whistleblower" protections for employees who, among other things, lawfully "provide information, cause information to be provided, or otherwise assist in an investigation regarding any conduct which the employee reasonably believes" violates specific sections of the U.S. Code or any rules or regulations of the SEC.
* A fine and/or imprisonment for not more than 20 years for anyone who "corruptly alters, destroys, mutilates, or conceals a record, document, or other object, or attempts to do so, with the intent to impair the object's integrity or availability for use in an official proceeding" or "otherwise obstructs, influences, or impedes any official proceeding, or attempts to do so."
Lawmakers hope the legislation will send a strong message that corporate wrongdoing will not be tolerated. Under the law, anyone who commits mail or wire fraud or certifies false financial reports could get up to 20 years in prison and be fined $5 million. Document shredding could result in a 20-year sentence.
It is imperative that records and information management professionals understand the implications of this new law--not only for themselves and their department but for their entire organization as well.
A summary of the law can be found at www.arma.org/news/08_06_2002.cfm.
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|Publication:||Information Management Journal|
|Date:||Sep 1, 2002|
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