Other Laws You Need to Know About .......................................................
In 1988, prior to SOX, the U.S. government also reinforced the 1977 Foreign
Corrupt Practices Act requirements, which define how you report your inter-
national trade to the government and outlaws bribery. According to the law,
corrupt payments to foreign officials to obtain or keep business are illegal.
Since 1988, the law also pertains to foreign firms or employees who act in the
U.S. in furtherance of any illegal payments.
We’re All In This Together: Convergence ..................................................
SOX requires that US-listed companies have a system of internal controls and
that directors monitor and report on operational risk. All companies must
follow the U.S.-specific generally accepted accounting principles (GAAP).
Similar standards are emerging elsewhere, and the spread of the International
Financial Reporting Standard (IFRS) outside the US means that a convergence
is taking place in financial reporting and requirements. Figure 4-4 shows you a
map of SOX-like laws around the world.
Japan’s J-SOX ......................................................................................
In 2006, the Japanese Financial Instruments and Exchange Law was promul-
gated and it comes into being in 2008. This law has become affectionately
known as J-SOX. Also inspired by corporate scandals, J-SOX requires that
companies implement a management assessment of internal controls on
financial reports. Like SOX, J-SOX is relevant to listed companies and their
subsidiaries. It is expected that J-SOX will prompt mass audit automation, as
it has in the U.S.
Figure 4-4:
Financial
compliance
laws around
the world.
102 Part II: Diving into GRC
