What is SOX Compliance?
All public companies in the United States are obligated to comply with the Sarbanes-Oxley Act (SOX), which was created to provide greater accuracy and transparency of corporate disclosures in financial statements and to safeguard investors from fraudulent accounting practices through effective risk management.
To achieve SOX compliance, a company must meet all the requirements outlined in SOX. While the law includes 11 titles, which are then divided further into sections, the most significant SOX compliance requirements are spelled out in Sections 302 and 404.
Those sections require businesses to design and implement proper disclosure controls (Section 302) and proper internal controls over financial reporting (Section 404). Companies must also submit quarterly certifications about the effectiveness of their controls to the Securities and Exchange Commission (SEC).