How Sarbanes-Oxley Impacts HR Departments

How Sarbanes-Oxley Impacts HR Departments

Ever since the Sarbanes-Oxley Act (SOX) was passed in 2002, following a spate of high-profile corporate scandals, companies have had to take a wide range of precautions to ensure that their financial statements are well audited and accurate. SOX requires a company’s senior management to attest to the accuracy of their financial reports, under penalty of law. While critics claim that the SOX Act increases the cost of doing business for American companies, and has introduced onerous restrictions that reduce their global competitiveness, supporters contend that the law has ushered in credibility and transparency into the financial world. Several large countries have also introduced laws with similar scope and reach, which indicates that these regulations were, in fact, long overdue.

Onus on HR Departments

How does SOX affect a company’s HR department? HR departments are finding that Section 404 (the costliest, most time-intensive aspect of the SOX Act) has a big impact on their operations and procedures, as it strongly mandates financial reporting accuracy. Since a company’s workforce, salaries, benefits, incentives, and training typically account for 40–60% of most HR budgets, these are significant expenditures that must be painstakingly accounted for under Section 404.

As a result, SOX has made it crucial for HR departments to account for paid time off, which consists of any time not worked by an employee for which a fixed (or prorated) amount of pay is accrued and paid out, often as vacation time or paid holidays. Financially, this time is a liability on a company’s balance sheet, hence it must be stringently accounted for. Striving to comply with Sec. 404 of SOX and avoid potential litigation and penalties are among the main reasons why many companies are adopting automated time and attendance solutions such as TimeOff.

HR departments using TimeOff are able to quickly and accurately account for their paid time off liabilities and obtain up to the minute reports, because the centralized, cloud-based system provides workforce-related information anytime and anywhere internet is available. Moreover, its reporting capabilities can be integrated with all leading business ERP applications, eliminating the hassle and time taken for HR departments to comply with SOX and other workforce regulations under FLSA and FMLA.

Avatar
ABOUT THE AUTHOR
Replicon
Replicon provides award-winning products that make it easy to manage your workforce. With complete solution sets for client billing, project costing, and time and attendance management, Replicon enables the capture, administration, and optimization of your most underutilized and important asset: time.
Get started today.
Set up a free trial based on your business needs. Start Free Trial

The Digitalization Jigsaw Puzzle: Saving a Spot for Integration

When it comes to running a business, it takes a village. And by village, we really mean more of a city - an often hectic, ever-growing population of systems that…Read More

Global Compliance Desk – Czech Republic

Changes to the Annual Vacation  Calculation in the Czech Republic An Amendment to Act No. 262/2006 Labour Code [ Act No. 285/2020 Coll. ] which was approved by the government…Read More

Accelerate Shared Services Growth with Time Intelligence

In pursuit of trimming costs, driving efficiency, and reducing workflow redundancies, many progressive organizations have turned to shared services centers to help streamline their internal processes. While adopting these consolidated…Read More

5 ways to improve service delivery in your organization

In a highly competitive market, service-based businesses need to capitalize on any opportunity to set themselves apart from their (often very similar) competitors. While implementation, system details, and service management…Read More

Demystifying the millennial workforce: 5 tips from Trunk Club’s Andrew Anderson Devine

Time magazine labels the millennial generation the “most threatening and exciting generation,” infamous for “narcissism [and] its effect: entitlement.” In the workplace, the perception of the millennial workforce is no…Read More

Common pitfalls in professional services organizations & how to avoid them (1/3)

The professional services organization (PSO) landscape is changing -- employees are harder to recruit and retain, a globalized marketplace increases competition for clients, clients want more for less, and management…Read More
  • Cloud
  • In The News
  • Corporate
  • Professional Services Management
  • Project and Program Management
  • Shared Services Management
  • Time and Attendance Management
  • Workforce Management
  • Customer Feature
  • Feature Update
  • Time Intelligence
  • Industry News
  • Webinar Recap
  • Global Compliance Updates