New Challenges for Finance Managers

by Sarah Clark
sarah.clark@careertrainingdirectory.com
Career Training Directory Columnist

Business jobs in finance have always come with some level of stress and accountability. But now, there’s an added layer of stress — compliance with the Sarbanes-Oxley Act.

Congress passed the Sarbanes-Oxley Act in 2002 to address the loss in investor confidence in the wake of the Enron scandal. Even while Congress was discussing possible legislative measures to curb corporate fraud, the WorldCom scandal broke, and its CEO Bernard Ebbers was indicted with fraud. There was clearly a need for reform.

But what does this new legislation mean for finance managers? It means that they have new laws to ensure their business is in compliance with in regard to financial management. A section of the law requires, for example, that companies establish internal controls intended to prevent fraud from occurring. It also requires that the board of directors be accountable for overseeing the audit reports to confirm compliance with Sarbanes-Oxley. It also means that financial managers (often the chief financial officer) are charged with uncovering any potential red flags in the internal controls.

Even finance managers of smaller businesses will be required to comply with Section 404 of Sarbanes-Oxley, the part that requires implementation and independent monitoring of internal controls. (Previously, smaller companies had been temporarily exempted from the section.)

Learning About Fraud Prevention in Business School

In searching for a finance degree program, ask program directors what their university is doing to prepare finance managers to comply with new fraud-prevention laws. Also ask if fraud-busting legislation such as Sarbanes-Oxley will be addressed in any classes.

For example, it may be helpful to learn how to work with the board of directors on compliance issues. While a company is complying with Sarbanes Oxley, board members generally hold regular meetings with a finance manager or chief financial officer to discuss the effectiveness of internal controls and areas that might be weak, or turn up as such during an external audit. Learning how to interact with a board during this process will be useful to future finance managers.

If you want to learn more about the Sarbanes-Oxley Act, check out the Securities and Exchange Commission website. The KPMG Audit Institute also has some very helpful information that can give you a sense of the challenges and opportunities that arise from moving toward compliance with Sarbanes-Oxley.

About the Author

Sarah Clark is a freelance writer who specializes in postsecondary education and career development.