Posted on 05/13/2022 9:17:58 AM PDT by DoodleBob
The Sarbanes-Oxley Act (SOX) is a federal act passed in 2002 with bipartisan congressional support to improve auditing and public disclosure in response to several accounting scandals in the early-2000s. The act was named after the bill sponsors, Senator Paul Sarbanes and Representative Michael Oxley, and is also commonly referred to as SOX. Find the statutory text here: Pub.L. 107–204.
Background
In the early-2000s, accounting scandals at major firms shook financial markets, calling on Congress to increase investor protection....
Provisions:
In enacting SOX, one of Congress’s primary aims was to prevent a firm’s management from interfering with an independent financial audit. Section 302 and 303 seek to enhance the independence of audits through regulating internal procedures and management actions. Section 302, codified 15 U.S.C. § 7241, requires public companies to adopt internal procedures for ensuring accuracy of financial statements and makes the CEO and CFO directly responsible for the accuracy, documentation, and submission of the financial reports and internal control structure.
...
Congress also sought to ensure the Act’s effectiveness by providing for robust enforcement and oversight provisions. Section 301, codified 18 U.S.C. § 1350 which imposes criminal liability on any officer, i.e. a CEO and CFO, who knowingly or willfully submits non-complying financial statements. Section 303, codified 15 U.S.C. § 7242, which makes it unlawful for any officer or director to exercise improper influence on audits, such as through coercion, manipulation, or fraud. Section 404, codified 15 U.S.C. § 7262, which requires management to establish adequate internal control structure and procedures for financial reporting. It also requires management to submit an end-of-the-year assessment on the effectiveness of the internal control structure.
(Excerpt) Read more at law.cornell.edu ...
SOX compliance is no picnic.
And don't forget, Dubya signed this into law...
Twitter management should be in prison, but Garland and DOJ won’t let Marxists be held to the laws meant for the little people.
Musk’s team is discovering >5% of Twitter accounts are bots.
Think CCP sponsored installed bot centers to control information flow.
Marxist Propaganda 101.
SOX is a pretty solid set of controls to assure the financial statement is valid.
It includes both financial and information technology controls.
External auditors can rely on controls audited by internal audit, but it would have been proven to have been accurate, at some point in time.
I will say I am not aware of a SOX control that would care about the number of customers. Instead, it is strictly financial, so income and expenditures would be things the accounting department would have to get right—not the number of “valid customers.”
And you can bet Musk knows this law and possible consequences.
Oooooh. By having his offer accepted Musk forced Twatter to open their books and now he’s using that info to attack the scumbag leftists who run the company and to legally withdraw or perhaps restate his offer after the stock tanks.
Twatter asserted that only 5% of their account were bots and their advertising revenue was based on this assertion. With the real number of bots looking more like +20% of accounts then this is fraud both nationally and internationally.
Of course, Musk’s perfect defense for revealing all of this is that he did not want to assume the criminal liabilities for the past behavior of the company.
Exec’s leaving in droves or being fired tells me something with the cooked-books has surfaced. Elon knew this long ago and is now making it public. This could end in a legal mess for this at Twitter involved.
Ad revenue depends on the number of customers. If they knowingly overstated the number of customers via deliberately undercounting the percentage of bots, that is fraud. The corporate officers are in serious trouble if that is the case.
I’ve worked in audit for over 20 years.
If revenue is impacted by number of "valid customers" (more customers means more advertising revenue) then SOX certainly applies.
I’ll bet they were Twitter generated “users” to pump up numbers. I will also bet that the entire stats figures for them are all faked. Faked Democrat “followers”, fake everything to do politically with the platform. Once you start “shadow banning” and manipulating and promoting one segment of users over another you can’t stop and the evidence will be in the code. All they have to do is check JIRA logs/tickets for the code releases and the evidence will be apparent.
Which is why going private equity is nice.
Twitter execs #LockEmUp
SOX cares very much about valid customers. Fake accounts is a big SOX violation for a number of reasons including fraud and rev rec.
Unfortunately SOX also now applies to private companies just not to the same extent. Just give it time. Grrr
It was later shown that Arthur Anderson did nothing wrong. This was strictly done to crash the economy.
Musk should nix the deal
Yes I know...same boss.
But while I have zero faith in Garland/Justice, in my experience the SEC is a rabid dog when it comes to guarding their territory.
Remember, even in a criminal enterprise there is ego, pride, megalomania, and territorial disputes.
I expect the SEC will go after Twitter if there is a case.
Let’s not forget that Netflix is now doing a 180 and trying to play nice. All this going public greed is kicking them in the nutts.
It wasn’t that many years ago that when something like this FRAUD was brought to light, the CEO and the Entire Board was ARRESTED AND CHARGED, now we also have Civil Asset Forfeiture, and they should CLEAN THEM OUT FINANCIALLY and leave them with nothing but the clothes on their back.
You made me look up JIRA dammit!
Now my code project list needs updating.
You game for some seed funding?
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