impact of SOX on JV company set up overseas 20



  • Is a JV company established and incorporated in a foreign country, of which a public listed company in the US has a 30% share through one of its subsidiary company, obliged to comply with SOX?



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  • As far as I know the main company has to know all his ‘financial’ risks with Sox… How will the main company assure the worth of assets in his JV overseas if this JV has no Sox ???%0ASo according to this I think is has to have also Sox…%0AMy company (in the Netherlands) is a 100% daughter of an American company; we are here also into the Sox… 😞



  • It is not 100% correct what’s stated above.%0AIf the JV is not SEC listed or a subsidiary of an SEC listed company they don’t have to fullfill sox.%0AIf one of the owners is a sec registrant it is a question of what happens during the financial reporting at the sec registrants site.%0AWill the JV be consolidated to the sec registrant group balance? If yes, than it’s most likley that the JV has also to comply to sox. At least sec. 302. If they have to comply to sec. 404 depends on the significancy the consolidated JV will have at the sec registrants balance.%0AIf the consolidated JV accounts are significant the JV has also to comply to sec. 404.%0ASo - it can be that the JV has to comply fully to sox but at least they have to comply to sec. 302.



  • thanks for your more specific explanation… 😉



  • Just a bit more clarification - if the JV is not consolidated into the SEC registrant’s financial statements, then all that the SEC registrant needs to do is ensure that its investment in the JV is fairly stated (i.e., not impaired) and that its share of JV income (on a U.S. GAAP basis) included in its financial statments is correct. Of course, all of this is subject to materiality.



  • Hello members,
    I have few doubts,
    a) Is Sarbanes oxley going to be scrapped after 31.12.2004, and it seems IASB is going to have a better control over it OR some of the sections of Sarbannes is going to be removed/edited, to have a better reporting format as per IFRS. Please clarify.
    b)In that case what would be the role of US GAAP.
    c)Is Sarbannes Oxley certification must for any auditor, what are the criteria for getting oneself certified.
    Please clarify :roll:
    cheers
    sathya



  • Hello members,
    I have few doubts,
    a) Is Sarbanes oxley going to be scrapped after 31.12.2004, and it seems IASB is going to have a better control over it OR some of the sections of Sarbannes is going to be removed/edited, to have a better reporting format as per IFRS. Please clarify.
    b)In that case what would be the role of US GAAP.
    c)Is Sarbannes Oxley certification must for any auditor, what are the criteria for getting oneself certified.
    Please clarify :roll:
    cheers
    sathya
    a. NO. SOx is here to stay
    b. GAAP and SOx are two completely different issues. GAAP is about financial reporting, SOx is about internal control.
    c. One does not get oneself SOx certified, there is no such certification. SOx certification is where the Officers of the Company certify that the Company as to the ‘quality’ of internal financial control. Auditors attest to this certification.



  • In the narrowest sense, I would agree with Denis. In the broader sense, GAAP represent principles and SOX represents rules.
    What we learned in Philosophy class still holds true in both accounting and law.
    A body of rules supports a principle and a body of principles supports a philosophy. Yes, SOX is about control, but GAAP is more than reporting. Control influences the quality of reporting.
    US GAAP and SOx must be a complimentary framework.



  • US GAAP and SOx must be a complimentary framework.
    Not strictly true. The rules of SOX are the same regardless of the GAAP you report under. Many Companies complying with SOX report their financial statements under a GAAP other than US.
    In the example originally given if the US was to implement IFRS it would not change anything about the SOX rules or a companies SOX processes. The financial reporting would, of course, be completely different and financial processes being assessed to comply with SOX may also change. The impact of SOX itself does not change.


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