SOX
Sarbanes-Oxley Act
Federal law mandating financial reporting controls for public companies.
What is SOX?
The Sarbanes-Oxley Act (SOX), enacted in 2002 following major corporate scandals (Enron, WorldCom), established requirements for public company boards, management, and accounting firms. SOX aims to protect investors by improving the accuracy and reliability of corporate disclosures.
Section 404 is particularly significant for IT and security professionals, requiring management to assess and report on the effectiveness of internal controls over financial reporting (ICFR). This includes IT general controls (ITGCs) that support financial systems.
Who Needs SOX?
- Publicly traded companies in the US
- Companies preparing for IPO
- Foreign companies listed on US exchanges
- Subsidiaries of public companies
- Accounting firms auditing public companies
Key Requirements
Core compliance areas for SOX
Section 302
CEO and CFO must certify financial statements and disclosure controls.
Section 404
Management must assess and report on internal controls over financial reporting.
IT General Controls
Controls over access, change management, operations, and system development.
Audit Trail
Maintain records of financial transactions with sufficient detail for audit.
External Audit
Independent auditor attestation of management assessment of internal controls.
Benefits of SOX Compliance
- Maintain public company listing
- Investor confidence and trust
- Improved financial reporting accuracy
- Reduced fraud risk
- Better corporate governance
- Foundation for other compliance requirements
Official Resources
Related Frameworks
SOC 2
The gold standard for demonstrating security practices to enterprise customers and partners.
ISO 27001
The international standard for information security management systems (ISMS).
GLBA
Federal law requiring financial institutions to protect consumer financial information.