Sarbanes-Oxley vs. Bill 198 – Key Differences

  • Date: May 21, 2010
  • Source: Admin
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The Sarbanes-Oxley Act of 2002, popularly known as SOX, was born to combat financial massacre in the public companies in U.S. This Act was a reaction to the infamous Enron and WorldCom financial scandals. Administered by the U.S. Securities and Exchange Commission (SEC), protecting shareholders and the general public from accounting errors and fraudulent practices in the enterprise had become the guiding rules of the Act.
Sarbanes-Oxley is not “prescriptive” by structure hence, it does not provide a specific set of business practices and does not recommend on business record storage; instead of that, it defines which records are to be stored and for how long. Additionally, SOX does not only aid financial corporation but also positively affect the IT departments engaged in storing a corporation's electronic records.
Now while talking about CSOX, the first point that is worth mentioning is CSOX is a direct outcome of the turmoil that took place in the U.S. markets in 2001 and 2002. To bring back the confidence of the investors, Canadian government proposed to pass CSOX, which was greatly influenced and were, to some extent, analogous to the Sarbanes-Oxley Act (SOX) in the United States.
2002 witnessed the enactment of Bill 198 as Chapter 22 of the Statutes of Ontario. Although the similarities between the two Acts can never be ignored, there are quite a few numbers of dissimilarities also can be found between the two. The most notable ones are:
Canadian SOX
For ‘accelerated' SEC registrants companies with a market capitalization of more than $75 million, the filing deadline for U.S. compliance was mid-November, 2004
Deadline for complete compliance For Canadian companies was near the end of 2006 , almost after two years of U.S. compliance. Reason for the delay was an intentional and strategic step of the Canadian regulators known as “watch and see”
SOX 404 requires external auditors to provide an opinion on the company's assessment of its internal controls.
Canadian companies do not have to submit an external auditor attestation of the adequacy of internal controls.
For US SOX, the internal control is supposed to reduce the risk to a “ remote chance ” which is a more severe standard in comparison to the guidance that SEC issued during 2007 following Canada's “reasonable assurance” requirement.
As per the CSA requirements, Canadian companies are supposed to deliver a “ reasonable assurance ” of preventing risk of material misstatement. And to give that assurance, the companies are supposed to show high level of commitment, care and meticulousness for reviewing and documenting their internal controls.
The Public Accounting Oversight Board enjoys a great level of independence and transparency in the U.S.
Comparing to the U.S. PCAOB , Canadian board suffers from lack of board independence and transparency.




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