A Quick guide
SOX Compliance Audit.
Benefits of Compliance
SOX Compliance Overview
The Sarbanes-Oxley (SOX) Act of 2002 is the legislative response to the corporate financial scandals of Enron, Tyco, and WorldCom. SOX created stringent new rules for accountants, auditors, and corporate officers and imposed strict record keeping requirements. The act also includes robust criminal penalties for violating securities laws.
SOX's regulations and enforcement policies modified or strengthened existing laws involved in security regulation and other laws enforced by the SEC. SOX made reforms in four areas:
- Corporate responsibility
- Increased criminal punishment
- Accounting regulation
- New protections
SOX is long and complex legislation, but there are three essential requirements:
Section 302 mandates that corporate officers, typically the CFO or CEO, certify that the company's financial statements comply with SEC requirements. Officers who sign off on financial statements they know to be false are subject to criminal penalties and prison.
Section 404 requires that management and auditors set internal controls and reporting procedures to ensure the adequacy of the controls.
Section 802 includes three rules that impact record keeping:
1. deals with the destruction and falsification of records.
2. strictly defines the retention period for keeping records.
3. outlines the records companies need to store, including electronic communications.
Who does SOX compliance apply to?
SOX applies to all publicly traded companies in the United States, its subsidiaries, and publicly foreign companies doing business in the United States. SOX also regulates accounting firms that perform SOX audits.
If your company falls under one of these classifications, you are subject to data security and controls requirements, as stipulated by SOX.
What are SOX Controls?
A SOX control is a rule that prevents and detects errors within a process of financial reporting. The purpose of these controls is to ensure accurate and reliable financial reporting.
Common controls for financial applications are related to system access, segregation of duties, change management, and data backup. The challenge is designing controls for your business processes, IT systems, and networks to meet your control objectives.
SOX Compliance Requirements
Public companies must comply with financial and IT requirements regarding how corporate electronic records are stored and handled. SOX internal controls require data security and complete visibility over dealings with financial documents.
SOX Compliance Audits
SOX audits require that record collection, auditing, and monitoring solutions provide a complete audit trail of access and exchanges with sensitive data.
Sections 302, 404, and 409 require strict auditing, recording, and monitoring of:
- Internal controls - Access Controls, IT Security, Data Backup, Change Management
- Network and database activity
- Login, account and user activity
Benefits of Compliance for a SOX Audit
- Improved control structure - Helps companies establish a control framework, streamline documentation and reliable financial reporting
- Improved risk management - Compliance provides a consolidated view of risks and transparency in processes
- Improved operational performance – ensures that the risk management, governance, and internal control processes are effective
- Helps prevent cyberattacks and data breaches – mandatory data safeguards and procedures help ensure that data is safe from bad actors
How SafePaaS can help
Preparing for a SOX audit can be a daunting, overwhelming process, but the process can become less stressful with the right solutions in place. SafePaaS provides a complete platform of solutions that provides automated solutions to address all your SOX compliance requirements.
ERP systems such as Oracle ERP Cloud and SAP sit at the core of any organization. These key systems store sensitive information and data that must be safeguarded from internal and external threats and continuously emerging threats. SafePaaS seamlessly integrates into any ERP system (or SOX application) to automatically monitor users and identities to identify risk.
Access Analytics is a key component of an enterprise access governance solution as it can improve the effectiveness of controls and provide real-time insight to mitigate emerging threats. SafePaaS customers use access analytics in many ways and rely on results to safeguard their business against cyber security risks and insider threats from access policy violations.
Comprehensive Segregation of Duties Repository
SafePaaS provides a comprehensive proprietary controls catalog of over 1,000 rules, which automatically detect roles and responsibilities with inherent violations, based on SOX mandates. These exhaustive controls have been used for over ten years in over 800 customer environments. We can also provide an additional 1,000+ configuration and transaction rules for popular enterprise applications tested by audit firms including the Big 4.
Access Risk Mitigation
SafePaaS allows users to quickly identify and remediate policy violations. This is done by reviewing access, ensuring identities are de-provisioned in a timely manner, and enforcing zero-trust. SafePaaS can respond to risk in real-time to protect organizations from SoD, data protection and cyber risk.
SafePaaS provides out-of-the-box integrations to embed advanced access controls in Identity Management and IT service management. SafePaaS supports ServiceNow, Okta, Azure AD, SailPoint and many others.
Cross-app Segregation of Duties
SafePaaS provides cross-application SoD between financial systems and any vertical solution as well as IGA and ITSM solutions.
SafePaaS automatically identifies and remediates high risks by continuously monitoring any ERP, application, cloud platform, operating system and database.
To learn more, please contact us.
Everything you need to know about ITGC SOX
ITGCs ensure that the systems and applications used by various departments within your organization are being used effectively and are not vulnerable to risk. Many of your business processes are supported by your ERP, such as Oracle or SAP. For example, finance, HR, purchasing, and sales all enter data used in your financial statements.
Solving the high costs of SOX compliance
The Sarbanes-Oxley Act has been in place for more than 20 years, and during that time, compliance costs have continued to increase. While there have been years where gains have been made to curb compliance costs, on the whole, they have steadily increased, and the last two years are no exception.
Tips to build an effective internal controls testing program
Having effective and targeted internal controls can protect your company's assets and intellectual property to prevent costly errors, reduce the risk of fraud, and decrease the chance of non-compliance. However, implementing internal controls is not enough. Internal controls should be continuously evaluated and tested to identify weaknesses and opportunities for improvement.