Sarbanes Oxley, or SOX, is a government act developed in 2002 that impacts all financial organizations and accounting firms. This act is also referred to as the “Public Company Accounting Reform and Investor Protection Act” and “Corporate and Auditing Accountability, Responsibility, and Transparency Act” because it seeks to regulate financial reporting and the business practices of publicly traded companies.
Sarbanes Oxley developed new requirements for corporate auditing practices to prevent corporate fraud and fraudulent financial practices. By adhering to SOX, businesses strengthen controls, standardize processes, enhance documentation, and increase board oversight, allowing for better financial management.
The Sarbanes Oxley bill was created in response to numerous major corporate and accounting scandals including corporate fraud and public company accounting oversight. The 11 section of the bill describes the responsibilities of a public corporation’s board of directors and add criminal penalties for misconduct. For companies who are not SOX compliant, the criminal penalties that are enforced by The Securities and Exchange Commission. The 11 sections of the bill are:
Over the last 20 years since its inception, Sarbanes Oxley has gained many supporters, but also some critics. Critics of the bill claim it is an overly complex regulation that reduces the competitiveness of companies in the United States against foreign financial service providers. However, supporters of SOX cite that the act improves the confidence of fund managers and investors regarding corporate financial statements. When addressed methodically with proper analysis and study, the regulatory requirements of SOX are not daunting.
Sarbanes Oxley compliance is crucial for data security. SOX compliance not only allows your company to pass an audit, but it has other benefits as well. A 2015 study conducted by Protiviti discovered that “78% of organizations leverage SOX compliance initiatives to drive continuous improvement around financial reporting” and “52% of organizations reported “significant” or “moderate” improvements in internal control over their financial reporting since the implementation of SOX”.
Sarbanes Oxley is a long-term process that increases value within an organization. Competitive organizations are using SOX as the framework for auditing IT infrastructure and managing security risks better.
The professionals at Thrive Security are committed to keeping your organization Sarbanes Oxley compliant. We begin with an audit of your infrastructure that processes financial data and reviews access, change management, security, and existing backup procedures. Following the audit, we construct an effective plan of action for ensuring your company stays SOX compliant. We help guide you to use the proper security and backup controls to keep all financial data accurate and safeguarded against loss. Schedule a free security assessment today!