Sarbanes Oxley Act requirements , Compliance and regulations


The Sarbanes-Oxley Act (SOX) was enacted by the Congress of the United States in 2002 with the purpose of enhancing the reliability of the information disclosed by corporations, in addition to protecting shareholders and the general public from fraudulent business practices and accounting mistakes. The legislation establishes due dates for compliance and mandates the publication of regulations regarding prerequisites. The legislation was created by Congressmen Paul Sarbanes and Michael Oxley with the intention of enhancing corporate governance and accountability in the wake of the financial crises that happened at companies such as Enron, WorldCom, and Tyco, amongst others.

Sarbanes Oxley Act requirements , Compliance and regulations

SOX compliance is now required of all publicly traded corporations, both from an accounting and an information technology perspective. As a direct consequence of SOX, IT teams are now required to maintain corporate electronic documents in a different manner. The legislation does not create a set of business practices or prescribe how a company should maintain its data; nevertheless, it does outline which documents should be kept and for how long the information should be stored. Companies are required to keep all of their business documents, including electronic records and electronic communications, for "not less than five years" in order to comply with the SOX regulations. In the event that compliance is not met, there will be consequences in the form of fines, jail time, or both.


As a direct consequence of SOX, IT departments are now tasked with the responsibility of establishing and managing an archive of business documents. They look for strategies to accomplish this goal that are not only frugal but also completely in line with the specifications outlined in the applicable laws and regulations. There are three regulations regarding the administration of electronic records included in Section 802 of SOX.

The first rule addresses the erasure, tampering, or fabrication of documents as well as the sanctions that are associated with breaking this rule.

The second rule is one that specifies the length of time that documents should be kept; current best practices recommend that companies safely retain all of their company records by using the same criteria that are used by public accountants.

Third rule: This rule describes the categories of business documents that are required to be maintained. These categories include all business records, communications, and electronic communications.


In order to guarantee that financial data is both accurate and safe from being lost, having the appropriate security measures in place is the most effective course of action for achieving compliance with SOX. The automation of SOX compliance and the reduction of expenses associated with SOX management are both facilitated for companies by the development of best practices and the reliance on suitable solutions.

Data classification tools are often used to assist in resolving compliance issues. These tools can automatically detect and categorize data as soon as it is produced, and they can also add permanent classification tags to the data. Context-aware solutions have the capability to classify and tag regulated data such as electronic health records, cardholder and other financial data, confidential design documents, social security numbers, protected health information (PHI), personally identifiable information (PII), and other structured and unstructured data.


A written statement is required to be provided in accordance with Section 906 of the Sarbanes-Oxley Act by both the Chief Executive Officer (CEO) and the Chief Financial Officer (CFO). This declaration is must be handed in with a periodic report, which is another requirement of the Act. According to section 906, the content of the written statement "shall certify that the periodic report containing the financial statements fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)) and that information contained in the periodic report fairly presents, in all material respects, the financial condition and results of operations of the issuer." This certification must be made that the financial statements in the periodic report fully comply with

The penalties for infractions are detailed in "(c)" of section 906, which is where the section is located. The following are the consequences for either;

1. Knowingly certifying a report that does not "comply" with the requirements outlined in section 906

2. Knowingly certifying a report that does not "comply" with the requirements outlined in section 906

In the event of a knowing violation, the offender will be subject to a fine of "not more" than one million dollars or to a jail sentence of "not more" than ten years, or both. A willful infraction carries a substantially higher fine, which is "not more" than five million dollars or twenty years in jail, or both of these options.


The ability of security teams to more readily monitor and enforce company regulations for the management of data is made possible by data categorization. It may be necessary to encrypt the data, compress it, or store it in a different file format if the material is particularly sensitive or if there are specific restrictions that apply to it. Corporations are able to prohibit unauthorized users, even those with administrative privileges to the system, from seeing regulated data if the appropriate rules are in place and followed. The most effective methods stop data from leaving the system by preventing it from being copied to portable storage devices. The capacity of security solutions to protect data that is shared is still another reason why these solutions are worthy of the investment. Users get access to the essential information thanks to these features that are referred to as "masking," which also ensure compliance with rules.


Without the appropriate security measures in place, maintaining SOX compliance as well as compliance with other regulatory requirements is very difficult, if not impossible. It is considerably more difficult to provide proof of compliance since this evidence has to demonstrate that written rules are in existence, communicated, and implemented while also supporting non-repudiation. The right security software solution will give the proof that may be used to support your claims, making your efforts to comply with the regulations worthwhile.

A software solution should have the capability to monitor data, enforce rules, and track every user activity in order to satisfy the criteria for compliance. All of the data required for compliance is already there when using trails of sufficient evidential quality. Rest a bit easier during your subsequent audit by securing both your data and your company with a software solution that guarantees SOX compliance. This will allow you to protect both your company and your data.

You may like these posts

Post a Comment