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

Why On-Demand Pay is In Demand

Human Resource Executive | August 09, 2019 By Julie Cook Ramirez Some employers are turning to on-demand-pay apps to help employees living paycheck to paycheck. Quick-service restaurants have never been…Read More

Global Compliance Desk – United Kingdom

Increase in Holiday Reference Period The definition of a ‘week’ for the purpose of the holiday pay reference period: A week is defined as starting on a Sunday and ending…Read More

Global Compliance Desk – Connecticut

New Paid Family Leave Law Enacted Connecticut has introduced a paid family leave program after Governor Ned Lamont signed the Paid Family and Medical Leave ("CPFML") Act. CPFML contribution collection…Read More

Miscalculating wages by a few cents led to this company paying a six-figure lawsuit

West Marine Products, which operates a chain of retail stores across the United States specializing in boating supply and fishing equipment, recently settled a class action lawsuit involving 707 former…Read More

Employee time tracking is dead

iBeacons, Bluetooth Low Energy, Proximity sensing and the obsolescence of time tracking as we know it. Businesses have to track the time their employees work for a variety of reasons,…Read More

Reducing Absenteeism with Effective Time Management and Absence Tracking

Workplace absenteeism is a major concern for American companies. According to the US Bureau of Labor Statistics, unplanned absences cost American businesses an average of 2.8 million workdays every year,…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
  • Chat with us
    How can we help you?