Organizations are under more pressure to conform to the regulations put forth by SOX. The IT departments of organizations are not exempt from this. Organizations need to be able to prove that they are handling sensitive customer information within the federal regulatory guidelines. Not being able to meet the regulatory expectations can end up in litigation steps being taken against the organization. This could also tarnish the reputation of your organization.
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What is SOX Controls?
A SOX control is a rule that prevents and detects errors in the financial reporting process cycle. The Sarbanes-Oxley Act of 2002 governs these controls (SOX). SOX is a federal statute in the United States that requires all public firms doing business in the United States to comply with the rule. Furthermore, SOX Sections 302 and 404 may apply to private firms.
The regulation aims to improve the quality and dependability of business disclosures in financial statements while safeguarding investors from corporate fraud. It also raises corporate governance’s responsibilities. Following the fraud and accounting crises at Enron Corporation, WorldCom, and Tyco International in the early 2000s, the bill was submitted.
SOX controls are ultimate, safeguards for certain operations inside the financial reporting process cycle. They are intended to assist each underlying business process in achieving its goals. Their objective is to prevent and detect faults that would otherwise cause flaws in the process. To verify the consistency of audits performed by accounting firms or external auditors.
Diligent Record Keeping of Financial Data
The first dimension, record keeping, governs how businesses must maintain track of their electronic communications. Organizations must be able to keep electronic records to show them to auditing organizations, which have the mission to guarantee that everything is handled transparently. This does not suggest that organizations may simply keep all information; rather, they must understand which information can and cannot be saved.
Access Control Management
Second, by granting users access to IT infrastructure, whether localized or in the cloud, organizations must be able to give auditors records of such login attempts. Login attempts, both successful and unsuccessful, are included. Organizations must do everything possible to protect sensitive information located on their network. IT workers must be able to demonstrate that security policies and procedures are in place, with the latter being based on worldwide best practices for cyber security. One such topic that comes to mind is the organization’s password policies.
Efficient Change Control Practices
The third dimension SOX may be considering is how the organization controls change in their environment, as well as products like software generated. If the IT staff is in charge of managing organizational and development changes, they should adhere to developed policies and processes. All changes should be thoroughly and transparently recorded. This could even imply that multiple signoffs are required before changes to the environment are implemented. To get a clean audit, the organization must be able to substantiate every change with the relevant paperwork.
Cyber Security Resiliency
Security implies being able to demonstrate security procedures that prevent data breaches, stop data leaks, and mitigate cyber threats. In general, this will involve vendor risk management, continuous security monitoring, and attack surface control. With that said, when it comes to audits, the verification of actions conducted against organizational policies is critical. These policies should control infrastructure standards as well as IT personnel responsibilities. The auditors might ultimately hold the organization accountable for any violations of these policies.
Conclusion
Once you’ve created a solid SOX compliance checklist to assist and direct your efforts towards sound regulatory compliance, you’ll discover that a robust internal control environment lowers the danger of internal tampering with financial statements. This, in turn, boosts public trust in your company due to its good financial reporting. Excellent oversight enhances corporate governance overall and lowers the likelihood of ever being submitted to litigation for failing to comply with SOX.
