The Sarbanes-Oxley Act (SOX) establishes regulations to protect investors by improving the accuracy and reliability of corporate disclosures. The framework includes various sections that address the responsibilities of corporate officers, disclosure controls, internal controls, and penalties for fraudulent activities. By adhering to SOX regulations, organizations enhance the integrity of their financial reporting and build trust with investors and stakeholders.
| Section | Control Category | Control | Description | Implementation Details |
|---|---|---|---|---|
| Section 302 | Corporate Responsibility for Financial Reports | CEO and CFO Certification | Require CEO and CFO certification of financial statements. | Develop and implement a process for the CEO and CFO to review and certify the accuracy and completeness of financial statements. |
| Disclosure Controls | Ensure the effectiveness of disclosure controls and procedures. | Implement disclosure controls and procedures to ensure timely and accurate reporting of financial information. | ||
| Section 404 | Management Assessment of Internal Controls | Internal Control Documentation | Document and test internal controls over financial reporting. | Develop and maintain comprehensive documentation of internal controls and perform regular testing to ensure their effectiveness. |
| External Auditor Attestation | Require external auditors to attest to and report on the effectiveness of internal controls. | Engage external auditors to review and attest to the effectiveness of the organization’s internal control framework. | ||
| Section 409 | Real-Time Issuer Disclosures | Timely Disclosure of Material Changes | Require timely disclosure of material changes in financial condition. | Develop procedures for the timely identification and disclosure of material changes in financial condition or operations. |
| Section 802 | Criminal Penalties for Altering Documents | Document Retention Policies | Implement document retention policies to prevent the unauthorized alteration or destruction of documents. | Establish and enforce document retention policies that specify the retention period and secure storage of financial documents. |
| Section 906 | Corporate Responsibility for Financial Reports | Penalties for Fraudulent Certification | Impose penalties for fraudulent certification of financial statements by corporate officers. | Implement internal controls and compliance programs to prevent and detect fraudulent activities related to financial reporting. |