Member Article

SOX Compliance – For Accurate Record Keeping in Companies

The SOX compliance is mandatory for all public companies, managements and public accounting firms for the accuracy in record keeping process in order to avoid fraudulent financial activities. The Sarbanese-Oxley Act also known as the Public Company Accounting Reform and Investor Protection Act or as the Corporate and Auditing Accountability and Responsibility Act, is more popularly known as the SOX act. This United States Federal law, named after U.S. senator Paul Sarbanese and U.S. representative Michael G. Oxley, was enacted on July 30, 2002.

The SOX act enhanced the power of the external auditors who review the accuracy of the financial statements of the company. It gives severe penalties for any kind of fraudulent activities in the financial record keeping process of the company. It is now mandatory under the SOX act for every top management to individually certify the accuracy of their financial information. This act also protects and controls the type of information released by the company about the customers or shareholders which helps to protect their identity.

A SOX training is a must for every company in order to be aware of all important new obligation according to the SOX act. The ignorance of any objective regarding SOX compliance can lead to serious penalties.

SOX regulations make it compulsory for a company to conduct audits by SOX compliance agencies. They monitor the record keeping policies of both the accounting and IT departments of the company. The financial transactions and account modifications has to be submitted by the company. The requested data has to be submitted within a given time by the departments of the company for audits. Any omission or incompletion in the data requested by the agency for audits will lead to noncompliance of the SOX act, which is a serious offence as per law.

SOX compliance requirements include the controlling of the information storage, the monitoring of which is now mainly done by the Information Technology department or the IT department of any company. The information technology departments and their protocols underwent a thorough renovation as a result of the coming of SOX Act. According to the SOX compliance requirement, the storage and recall of all kinds of information should be borne by the IT department of a company, thus making them the gatekeepers of business data. Any information regarding the company has to be stored for a period of at least five years of time for future reference and investigations, if necessary. The enforcement of record keeping by the act has reduced the amount of financial scandals.

Many SOX compliance training programs are offered by certified firms, the course completion of which provide SOX compliance training certificates. This course aims in giving necessary knowledge for procuring SOX compliance objectives of a company.

This was posted in Bdaily's Members' News section by ComplianceOnline .