Sarbanes-Oxley Act 2002

Find out how GSK conforms with the Sarbanes-Oxley Act 2002.

Following a number of corporate and accounting scandals in the USA, Congress passed the Sarbanes-Oxley Act of 2002 (Sarbanes-Oxley). Sarbanes-Oxley established new standards for corporate accountability in the USA. Although our corporate governance structure was believed to be robust and in line with best practice, certain changes were necessary to ensure compliance with Sarbanes-Oxley.

The Sarbanes-Oxley code of ethics

Sarbanes-Oxley requires GSK to have a code of ethics "applicable to its Principal financial officer and controller or Principal accounting officer, or persons performing similar functions".
The code is defined as having standards that promote:

  • honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships      
  • full, fair, accurate, timely, and understandable disclosure in the periodic reports required to be filed by the issuer
  • compliance with applicable governmental rules and regulations

GSK formulated a Sarbanes-Oxley code of ethics around seven policies:

  • Code of conduct
  • Company assets and proprietary information
  • External communications to investors and media; external speaking engagements and publications
  • Political contributions
  • Preventing corrupt practices and maintaining standards of documentation
  • Risk management and legal compliance
  • Share dealing

Our code of ethics goes beyond the requirements of Sarbanes-Oxley, in that it is applicable to all employees. The Chief Executive Officer and Chief Financial Officer have both signed statements certifying their compliance with the code of ethics, as have the Senior Vice President, Financial Controller and the Senior Vice President, Finance Services.

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Internal control

Section 404 of the Sarbanes-Oxley Act of 2002 requires GSK's Annual Report on 20-F filed with the Security and Exchange Commission to contain a report on internal controls.

This report must acknowledge that it is management's responsibility for establishing and maintaining adequate internal control over financial reporting and include an assessment of the effectiveness of the company's internal control over financial reporting. Management's evaluation is subject to audit by GSK's external auditors.

Financial expert

Sarbanes-Oxley Act of 2002 (Sarbanes-Oxley) requires that GSK's Annual Report contains a statement as to whether a member of the company's Audit & Risk Committee is an “Audit Committee Financial Expert” as defined by Sarbanes-Oxley.

A consistent approach is taken by the Board in respect of this requirement and a similar requirement in the UK Corporate Governance Code for a member of the Audit & Risk Committee to have “recent and relevant financial experience”.

The Board has determined that Judy Lewent, Chairman of the Audit & Risk Committee has the appropriate qualifications and background to be an Audit Committee Financial Expert and also has recent and relevant financial experience.

Disclosure committee

As recommended by the Securities and Exchange Commission (SEC), GSK established a Disclosure Committee (the Committee).

The Committee reports to the Chief Executive Officer, the Chief Finance Officer and to the Audit & Risk Committee. It is chaired by the Company Secretary and the members consist of senior managers from finance, legal, compliance, corporate communications and investor relations. External legal counsel, the external auditors and internal experts are also invited to attend the Committee's meetings periodically.

The committee has responsibility for considering the materiality of information and on a timely basis, determining the disclosure and treatment of material information. The Committee also has responsibility for the timely filing of reports with the SEC and the formal review of the contents of GSK's Annual Report and Form 20-F.

Disclosure controls

Section 302 of the Sarbanes-Oxley Act of 2002 requires GSK to carry out an evaluation under the supervision and with the participation of the Group's management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Group's disclosure controls and procedures as at the year-end.

The results of this latest evaluation are included in our Annual Report (PDF).

Significant changes

There were significant changes to the system of internal control during 2010 as a result of the Simplify Finance Change Programmes (CBS, Simplify Finance, ERP).  

These changes were captured and assessed by management and our external auditors, to ensure that there was no adverse impact to the Group's internal control over financial reporting.