Sarbanes-Oxley Act on Trading Firms 287



  • Hi all,
    I am currently working in a trading firm dealing with import and export of raw materials. My company is currently conducting the audit for Sarbanes Oxley Act. I have a question and I hope someone can answer my question.
    My company is currently trading using the Inco terms. We are buying raw materials on trade term FOB and selling the materials on trade term CIF.
    FYI :
    FOB - Free On Board
    ~ means that the seller delivers when the goods pass the ship’s rail at the named port of shipment. The buyer has to bear all cost and risk of loss of or damage to the goods from that point.
    CIF - Cost, Insurance and Freight
    ~ means that the seller delivers when the goods pass the ship’s rail in the port of shipment. The seller must pay the cost and freight necessary to bring the goods to the named port of destination but the risk of loss of or damage to the goods, as well as any additional cost due to events occuring after the time of delivery, are transferred from the seller to the buyer.
    We used the Bill of lading’s date as the date of transferring of ownership from the seller to buyer.
    However our auditor said this isn’t the correct method
    My question is that does Sarbanes Oxley Act overrides the INCO terms?



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  • If I read you correctly, your auditor is wrong.
    Is the only issue about the date at which you recognise the sale or purchase - this is a GAAP issue which is clear cut - or is the auditor concerned about something else?
    Sarbanes-Oxley certainly does not in any way ‘override’ inco.



  • I am confused - what is relevance of SOx here?
    Inco is a standard developed by the International Chambers of Commerce for Shipping terms and conditions. It’s a contract thing.
    SOx is about internal control, I can’t see any reason for use of inco terms and conditions causing a control problem.
    As the previous guest posted, how you use the inco terms can determine your cost and revenue recognition, but again this is not a SOx issue - it is a GAAP issue.
    I fail to see a possible SOx issue :?



  • 😄
    Thank you for your response. I think I need to check with my auditor in detail.


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