Implementing Financial Acumen and SOX Requirements

Implementing Financial Acumen and SOX Requirements

Part 1: Financial Acumen

It is quite essential for every organization to follow financial acumen so that sound financial judgments can be achieved. This practice is based on the application of financial rigor and concepts so that various analytical judgments can be made associated with the financial aspects. Increasing the knowledge of the employees regarding the financial factors of an organization can help solve many financial issues and reach financial targets. Attaining financial acumen for any organization is essential in order to achieve long-run success in the financial terms. This is because; the concept is associated with teaching the employees all the financial happenings, including the revenues, profits, expenses, and others (Caruso, 2018). It is required for sharing the ideologies of the employees that can help enhance the financial situations of their employer organization. A business following financial and business acumen can make effective budget decisions, investment decisions, cost control processes, and others. Moreover, it is also useful in allocating the critical financial resources according to the requirements of each expenditure section of a business Abdullah & Azam, 2017). Hence, the process is quite beneficial for different organizations in securing the financial targets along with attaining a sustainable business environment during its long-term operations.

According to the highlights provided by Abdullah & Azam (2017), in some of the studies conducted in Malaysian small companies, it is seen gaining sufficient financial knowledge by the employee can lead to long-term business success. Moreover, ensuring high business success is associated with training the employee with the financial requirements along with the financial transaction of their employer company. This can lead to the sharing of knowledge and thoughts of the employees from their personal views. Through the view of Albastiki & Hamdan (2019), valuable financial information can be gained from the views of different employees, which can then be used in undertaking various financial decisions. It is also highlighted that companies ensuring financial acumen in their activities are more financially stable and prosperous than the companies who are not following the process. Hence, this makes it clear that financial literacy is required among the employees to ensure business success. On the other side, financial illiteracy can lead to a lack of sufficient capability of making financial decisions and judgments along with weak financial situations. Regarding this, Caruso (2018) put focus on the students in place of the employees to highlight that through gaining business knowledge. They can gain insights into business activities. It can help them in making corrections in case some wrong decisions are identified by them. They make it easier for the business managers to confront the financial issues and undertaking necessary actions for the same.

The benefits of financial acumen can be explained from my personal experience when I was working with a telecommunication organization. The management of the company was quite active in having effective communication with its employees regarding its financial activities. The employees, including me, had brief knowledge of the suppliers of the organization along with the transactions it used to have with them. Moreover, the employees were trained to gain ideas about the applied tax and statutory rates in its operating countries. The employees were also highly concerned with its target places and the categories of customers that were the key targets of the organization. Regarding this, the other stakeholders were also involved in the process, and they had meetings at regular intervals for discussing various financial matters. With its financial acumen centric culture in its activities, the organization was successful in its operations. It was also capable of maintaining a strong financial position in the market as its employees were of great help in undertaking various financial decisions. This was also effective for the organization in improving employee performance through fostering confidence and efficiency among all the employees.

Part 2: Sarbanes-Oxley (SOX)

Sarbanes-Oxley Act (2002) is the act established for protecting the accounting process of the public companies, and it is also considered as Investor Protection Act (2002) (sarbanes-oxley-101.com, 2020). It was passed by the US federal law section so that scandals in the corporate world regarding accounting and financials can be identified.

101. The rationale for SOX: The mentioned act is associated with monitoring the functions of the critical audit and accounting firms so that they can be evaluated according to transparency in their acts. They must conduct their work while maintaining corporate governance and disclosing all the necessary financial requirements of the individual companies they are assessing (sarbanes-oxley-101.com, 2020).
102. Provisions of SOX: 1) Establishing corporate responsibilities for all the accounting process and financial reports (S302)

2) Disclosure of all the financial statements (S401)

3) Assessment of internal controls management (S404)

4) Real-time disclosure of issues (S409)

5) Criminal punishment for duplicating documents (S802)

6) Protecting employee of public companies (S806)

7) Attempting fraud offenses (S902) (sarbanes-oxley-101.com, 2020)

2002. Enforcement of SOX: The act was enforced in order to address the issues and scandals faced by different public companies in their accounting process in 2002. According to this act, a board was organized that can take over the issues by monitoring and inspecting the accounting firms regarding their actions.

Reference List

Abdullah, M. A., & Azam, S. F. (2017). Mediating relationship of financial practice between financial knowledge and business success: An empirical study on Malaysian small enterprises. Australian Academy of Business and Economics Review, 1(1), 1-23.

sarbanes-oxley-101.com, (2020). Sarbanes Oxley Act – Summary of Key Provisions. Retrieved from: https://www.sarbanes-oxley-101.com/sarbanes-oxley-compliance.htm

sarbanes-oxley-101.com, (2020). Sarbanes Oxley Audit Requirements. Retrieved from: https://www.sarbanes-oxley-101.com/sarbanes-oxley-audits.htm

Caruso, J. V. (2018, March). Integrating Business Acumen and Analytics: A Simulation-based Approach. In Developments in Business Simulation and Experiential Learning: Proceedings of the Annual ABSEL conference (Vol. 45).

Albastiki, N., & Hamdan, A. (2019, September). Financial Illiteracy and Entrepreneurship Success: Literature Review. In International Conference on Innovation and Entrepreneurship (pp. 28-XVIII). Academic Conferences International Limited.