Grab this SOX Compliance Checklist to Help You Navigate SOX


SOX Compliance or the Sarbanes-Oxley Act is a US Law enacted to protect investors by preventing the fraudulent activities practiced by corporations.

And as the name suggests, a SOX Compliance Checklist is a checklist made to ensure the company’s compliance with the SOX Act and strengthen internal controls. Let’s dive in to find out more about SOX Compliance Checklist and why you should use it. 

What is SOX Compliance?

The Sarbanes-Oxley Act, enacted after the accounting scandal in the early 2000s by Enron WorldCom and Arthur Anderson, prevents deceptive trade conduct by companies.

When you work on different projects as investors, you will find a handful of people trying to manipulate data to cover up their mistakes so they can avoid further charges. If you’re an investor, SOX Act helps you prevent such deceptions made by companies, such as underreporting costs or keeping huge debts off racks, etc. 

Passed in 2002, the SOX Act focuses on increasing transparency between the public and corporations by getting companies to formalize a system of checks and balances. 

That said, companies in compliance with the SOX Act also get protected against data theft since SOX Compliance works a lot like a cyber security tool. 

A SOX Compliance Checklist helps management teams of publicly trading companies in the United States maintain company compliance with the SOX Act.

Since any noncompliance with the SOX Act can lead to millions of dollars in fines and bankruptcy, the management team deliberately examines projects for any signs of deviations. 

Who Should Comply With SOX?

Apart from all the US Public companies, the SOX Act also affects accounting firms that regulate audits for any US Public company. And this goes for entirely owned corporations and foreign companies that do public trading in the US market.

However, the SOX Act does provide some exceptions for non-profit organizations, charities, and private companies. 

Even though private companies don’t need to follow all the 11 sections of this Act, those planning an Initial Public Offering (IPO) must comply with every part. 

That said, SOX does call out private organizations that deliberately manipulate and falsify accounting data. In case any private organization is found guilty of deviations and deceiving clients, SOX provides penalization. 

SOX Requirements 

The following requirements are directly applicable to companies subject to SOX Compliance. 

Section 302 

It talks about how public corporations should report their financial situation, and the CEO or CFO should personally sign each report sent to the Security Exchange Commission (SEC). Note that the CEO or CFO is held personally liable for all the documents and deviations found within.

So, the CEOs must pledge to vouch for authentication and attest that the documents contain all necessary information within 90 days of report submission. 

Section 404

SOX Act calls for a corporate team that would be responsible for an adequate internal control system. Any deviations or shortcomings of the internal control system must get reported by both the management and the auditors. 

Section 409

If the company’s financial situation changes, causing the company to perform poorly, then the company authorities are instructed to inform the investors and clients. 

Section 802 

Company officials who manipulate financial reports to conceal deviations or an entry can alter SEC’s administration. If found, they will be charged and subjected to fines and imprisonment for up to 20 years. 

Section 906

Higher authorities of public corporations that sign and submit falsified reports will get subjected to 5 million dollars fines and up to 20 years of imprisonment. 

SOX Compliance Audits 

The SOX Act mandates that a company has to get its financial statements verified each year. And to do this, companies require independent auditors to complete the SOX audits.

In this process, the authorities examine the past audits and verify if the newer reports comply with the SOX ACT. Moreover, the auditors can go as far as to do personal interviews with the higher officials to verify the financial statements. 

The SOX Act generally gets performed according to an IT Compliance Framework called COBIT. Under this, the auditors may examine the corporations’ activities and see if there need to be any alterations made. 

SOX Compliance Checklist and its benefits 

All in all, SOX Compliance is not just a legal obligation. It can further assist you in identifying permission issues, find, tag, and prevent sensitive financial statements from a breach. And a checklist is what keeps you up to date with every step that you accomplish while evaluating the financial data of any corporation. 

With a SOX Compliance Checklist, you can evaluate if the internal security controls are up to date and working correctly. You can further ask the authorities to look into it if they aren’t. Moreover, this offers the benefit of doing routine check-ups, so you don’t get any surprise breaches. 

SOX offers the framework within which the financial statement of a company needs to stay. On top of allowing companies to avoid data breaches, it also dodges the bullet of millions of dollars in fines.

To maintain SOX Compliance, companies build an internal team that monitors activities and improves communication. And this, in return, helps in companys’ overall performance. 

A SOX Compliance Checklist is there to make your job as a company authority or SOX auditor better. What you need to do now is to take the next step and download the SOX Compliance Checklist!

SOX Compliance Checklist