Wondering about SOX compliance? More about the Sarbanes-Oxley Act

The Public Company Accounting Reform & Investor Protection Act is commonly called SOX or Sarbox. The Public Company Accounting Oversight Board is in-charge of overseeing and regulating compliance. Effective July 30, 2002, all public corporations are required to certify as SOX compliant.

Like any other regulation it should be addressed methodically, via proper analysis, documentation and study. Some sections of SOX are more pertinent to compliance then others.

To assist those seeking to meet the demands of this act, the following link is helpful: www.thecaq.aicpa.org/Resources/Sarbanes+Oxley.

SOX is arranged into eleven titles. One of the most important and challenging sections within these is 404.

Section 404 requires:

• Companies must have the ability to sustain compliance.
• Documentation structure with clear accountability.
• Documented efficiency of operating and financial structure, procedures, and policies.
• An enabling technology structure with IT securities.
  

Although this is quite a lot to deliver, there are ways your organization can successfully address the challenge presented by SOX.

Solutions

• Form a compliance team.
• Implement financial compliance processes.
• Documentation/IT Consultants – Get support with expertise to identify your documentation or technology needs to help minimize non-compliance risks. They’ll do the work that a public accounting firm won’t do, such as preparing and implementing whitepapers and electronic documentation.
  

Not only are public companies required to comply but SOX is also hitting the private sector. Trends have found that one of four privately held businesses have voluntarily adopted some of the SOX practices. Why? To help create better companies: companies that invite both public and private investors, merger and acquisition prospects, and customers. Many private companies lack formal, documented controls, exposing them to unlimited risk.

One last reason to consider compliance: To limit their own risks, many lenders and insurance companies are applying more stringent certification requirements, like those of SOX, to privately held companies.

--- Bridget Chandler, Controller, Documentation Strategies, Inc.