SOX software compliance is a legal requirement for corporations and it is one of the fair business practices ensuring that the companies behave ethically. It limits the access of the internal financial systems by providing protection against data theft or cyber-attacks.
The US Congress passed the Sarbanes-Oxley (SOX) Act in 2002. The act is aimed at protecting people from fraudulent practices conducted by corporations and businesses. The SOX Act was created to ensure transparency in financial reporting by companies and to promote a formal system of checks and balances.
Table of Contents
What is SOX Compliance?
US Senator Paul Sarbanes and Representative Michael G. Oxley were involved in creating the bill after a number of high-profile corporate scams came to light. The desire was to protect investors by increasing the consistency and accuracy of corporate discoveries. SOX software compliance puts forth a set of responsibilities that the board members and officers of publicly listed corporations must follow. Within the act, there is the provision that states criminal penalties will be enforced if a business fails to comply with the prescribed norms.
SOX software compliance is applicable to publicly listed companies, audit companies, and accounting firms who work with companies that fall under SOX.
SOX Compliance checklist
Different organizations can vary in their SOX software compliance checklists. Some of the common guidelines to be followed are:
- All of the software and systems should remain updated, including the monitoring and logging software.
- All of the issues arising during a SOX audit should be resolved.
- The data should be classified and stored properly.
- Each user’s behavior should be monitored in order to spot anomalies in their behaviors to help in prevent data breaches.
- Employees should be prevented from copying sensitive data on their personal devices.
- The access controls should be regularly checked.
- Auditors should have access to the software system and a compliance status report should be maintained to help the SOX auditors quickly check all security controls.
- The employees should be educated regarding the handling of the financial data.
- Companies must report security breaches to the public.
Advantages of SOX Compliance
There are a number of benefits to using compliant SOX software:
- Company financial data is predictable and regulated.
- SOX software compliance has greatly helped companies in improving their data security which has helped restore public confidence in businesses. Businesses have even found it easier to raise capital for their business because people have more faith in the system.
- Financials are more transparent and foreseeable, so stockholders are much happier than before.
- Security threats can be easily detected. The earlier the detection, the quicker the resolution. This is very important since data breaches can happen suddenly and can pose long-term impacts and cause a company to suffer reputational loss.
- The communication between different departments is highly improved driving collaboration and growth in the company.
- A framework is implemented within the corporation which allows it to become more efficient in maintaining its financial data. With SOX compliance, various other aspects of the corporation are also improved.
It is advised to take the help of an expert to make sure that everything runs smoothly, and the business also stays compliant. There are numerous risks associated with the non-compliance of SOX. You should ensure that you are using good security controls for staying compliant. SOX software compliance ensures that you have complete knowledge of your companies’ sensitive data. The applicable companies need to take part in audits on a yearly basis and the audit results should be made public to all the stakeholders.