Please Help...HELP 215

  • If an employee enters ghost employees in the payroll system, which Title and section of SOX are they breaking. Furthermore, What are the consequences of this violation (both the user and the org). Are there any cost associated with this violation (i.e. fines, hire auditors)

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  • As long as payroll expenses are properly reported externally, no ‘SOX’ rules have been broken. There are no SOX rules against committing fraud internally. Criminal laws would apply, not SOX.%0ASOX addresses the accuracy of financial reporting and any underlying internal controls to help ensure that the financial reporting is accurate. Internal controls should also be in place to prevent fraud (there is no fraud control that works 100% of the time). Employee theft, whether through phantom employees or pocketing cash that should go through the cash register as a sale or any other misappropriation of assets does happen in all businesses. It is up to each business to assess the level of theft it is willing to risk. There is a cost / benefit to every control. This will drive the design of controls meant to deter theft. If it occurs, then it should be properly reported in the financial statements. This is where SOX comes in.

  • As long as you show that money is leaving the company and what it is spent for (in this case employee costs) and showing that in your bookings/paperwork, you’re fine. No SOX rules violated. The rest is totally operational risk.

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