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To improve the efficiency
and effectiveness of the health care system, the Health
Insurance Portability and Accountability Act of 1996
included a series of "administrative simplification"
provisions that require the Department of Health and
Human Services (HHS) to adopt national standards for
electronic health care transactions. By ensuring
consistency throughout the industry, these national
standards will make it easier for health plans, doctors,
hospitals and other health care providers to process
claims and other transactions electronically. The law
also required security and privacy standards in order to
protect personal health information.
As required by HIPAA, the
final regulation covers health plans, health care
clearinghouses, and those health care providers who
conduct certain financial and administrative
transactions electronically. The provisions of the final
rule generally apply equally to private sector and
public sector entities.
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Effective in 2004, all
public companies will be required (for the first time)
to submit an annual assessment of the effectiveness of
their internal financial auditing controls to the
Securities and Exchange Commission (SEC). Additionally,
each company's external auditors are required to audit
and report on the internal control reports of
management, in addition to the company’s financial
statements.
The Sarbanes-Oxley Act of
2002, also known as SOX, was passed due to the
accounting scandals at Enron, WorldCom, Global Crossing,
Tyco and Arthur Andersen, that resulted in billions of
dollars in corporate and investor losses. These huge
losses negatively impacted the financial markets and
general investor trust. The Sarbanes-Oxley Act mandates
a wide-sweeping accounting framework for all public
companies doing business in the US.
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