The Sarbanes-Oxley Act is a U.S. federal law that applies to all publicly traded businesses in the United States. It imposes sweeping corporate governance standards …
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.
Section 302 of the Act mandates a set of internal procedures that are designed to ensure accurate financial disclosure. Section 404 requires management and external audit firms to report on the adequacy of the company’s internal control on financial reporting (ICFR).