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New anti-fraud rules cause upheaval

New anti-fraud rules cause upheaval

by Rick Turoczy on March 5, 2005

And more confessions are expected: As many as one in five public companies across the country is expected to admit shortcomings as the latest deadline nears for complying with the 2002 corporate-crackdown law known as Sarbanes-Oxley. Securities and Exchange Commission officials estimate that 500 companies nationwide have already noted some level of problems.

Under Sarbanes-Oxley, every public company is supposed to prove — by mid-March in many cases — that it has strong internal systems that can catch an employee trying to commit fraud or flag accounting errors before a company tallies its official profits. If a company knows about problems with its control systems along the way, it is obliged to disclose what it has uncovered — thus the current flood of mea culpas.

New anti-fraud rules cause upheaval

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