How Software Can Help Companies Meet Sarbanes-Oxley Act Requirements
The Sarbanes-Oxley Act (SOX) requires companies to have clear, transparent, and effective control over their business processes. This includes internal accounting controls that prevent the company from violating its accounting and financial reporting laws. In addition, the act requires the company to conduct an annual audit to evaluate the effectiveness of its internal control structures.
SOX requirements are not easy to implement. Not only do they require an organizational structure that is complex and involves numerous departments, but they are also quite expensive to create. Fortunately, software is available to make it easier to comply.
The Sarbanes-Oxley Act was passed in 2002 with bipartisan congressional support. It was designed to fix outdated securities regulations and improve public disclosure. The law created new rules for corporate officers and auditors, increased the penalties for violations, and improved auditing practices. There are several areas of the Sarbanes-Oxley Act, including Sections 302, 404, and 802 of the Act. Each of these sections requires documentation of basic business processes, assigning responsibility for these processes, and documenting internal control procedures. Depending on the size of the organization, the Sarbanes-Oxley Act requirements can be quite onerous.
Companies that do not use software to comply with Sarbanes-Oxley Act requirements may be found liable for failure to meet these requirements. Large benefactors and donors to not-for-profit companies are more likely to insist that these organizations comply with the requirements. However, not-for-profits are less likely to invest in software because of the high cost of implementation.
If a company isn’t using Sarbanes-Oxley Act software, its management is more likely to face fines and legal penalties for not meeting the Act’s requirements. One of the best ways to prevent this from happening is to develop a system that makes it easy to meet all of the Sarbanes-Oxley requirements. For example, there are several templates and screens that can help companies meet the requirements. These templates can be used to create an organized set of control points and other business processes.
These templates include specific financial models. They are designed to reflect normal business processes and allow users to quickly assess whether or not these are in line with Sarbanes-Oxley requirements. Moreover, these templates include objectives, control activities, and risks that are based on COSO standards. Users can then quickly identify any potential issues that might cause a problem with an audit.
These templates are easy to modify and use, and they also provide enhanced degree of protection for the company. Using these templates helps to mitigate the costs associated with implementing Sarbanes-Oxley. When it comes to Sarbanes-Oxley, it’s important to start as soon as possible. Rather than re-inventing the wheel each year, the S.O.P. template provides a simple, cost-effective solution to the task.
While these templates can assist in mitigating the cost of implementing the Sarbanes-Oxley Act, it’s important to note that there is no deadline for implementing these requirements. The exact date depends on the fiscal year and the size of the organization.
