Businesses required to comply with the Sarbanes-Oxley Act (SOX) can come across a number of uncertainties and questions about what needs to be done in order to be compliant. In short, SOX compliance requires companies to have an internal control environment in place over financial reporting to ensure that financial information from a company fairly depicts the financial condition and the results of the company’s operations. For SOX to be completed both efficiently and effectively, organizations need to have a framework in place. From there, they will begin to experience benefits that can be felt by the entire company.
Organizations should consider the following elements to implement and maintain a successful SOX framework:
- Strategy – Includes defining the needs of the company and the mission they’ll follow as they implement their SOX processes. Also, in this first step a risk assessment is performed to identify risks that could affect the business.
- Structure – Defines the department setup, including stakeholders and internal audit, as well as the budget for the engagement.
- People – Understanding which employees will be involved in the SOX process, which includes employees and third-parties who will be responsible for coordinating the SOX efforts.
- Technology – Applications or tools that will be used to complete the SOX processes and make the audit more efficient.
- Process – Includes documented methodologies and procedures to define clear guidance on how the SOX process should be completed.
