The Sarbanes-Oxley Act (SOX) is a United States regulation that mandates certain practices for financial reporting for publicly traded corporations. It applies to all publicly traded companies in the U.S., as well as international companies that have registered equity or debt securities with the Securities and Exchange Commission (SEC).
To comply with SOX, organizations must:
- Implement Internal Control Over Financial Reporting: This involves ensuring that only authorized individuals have access to the financial systems and data.
- Apply Corporate Responsibility for Financial Reports: Top management must certify the accuracy and completeness of the corporation’s financial reports. This includes managing the access rights of these individuals.
- Use Audit Committees: Public companies must have a qualified and independent audit committee. This involves overseeing the company’s auditors and enhancing the independence of outside auditors.
- Maintain a Record of Audit and Non-Audit Services: Organizations must keep detailed records of the services provided by their auditors, ensuring that non-audit services do not compromise the auditors’ independence.
- Provide Training to all employees about SOX and how it applies to the organization’s financial practices: As part of this training, employees should be educated about their responsibilities in terms of access control and the potential consequences of non-compliance.