How Technology Simplifies SOX Compliance Reporting

The Sarbanes-Oxley (SOX) Act is almost two decades old at this point and SOX compliance is taken seriously by all businesses that need to comply with the act. Complying with SOX is not as simple as it may seem, because the Sarbanes-Oxley act is slightly different in nature compared to other regulations and laws that businesses must comply with. Modern risk and compliance management solutions, however, simplify SOX compliance by enabling businesses to painlessly collect and report certifications and attestations with ease.

What Makes SOX Compliance Different

Businesses need to comply with regulations but there is a slight difference in what SOX intends to do. The Sarbanes-Oxley Act was implemented after multiple high-profile accounting scandals and problems were discovered in major organizations. Businesses were already required to submit documents and ensure they were following the law – the problem was that in these scandals the businesses were complying with the letter of the law by changing important documents and manipulating numbers on behest of upper management.

This exposed a major vulnerability in the financial ecosystem. If the accounting information and data provided was not trustworthy, the auditors often had no way to determine who changed the information with nefarious intent. The Sarbanes Oxley Act combats this problem by introducing measure that increase transparency while also ensuring ownership over the data that is being provided.

This is why SOX compliance is not simply about submitting documents. The purpose of SOX compliance is to ensure that a business has the safeguards and framework in place which will ensure transparency and accuracy in reporting. The auditors don’t look at whether a business is submitting fraudulent reports – they are looking at whether a business can detect any manipulation in records. This is also why the Sarbanes-Oxley Act requires the CEO and CFO of businesses to submit a written statement that the information submitted has been properly vetted and is accurate – because it ensures ownership of transparency by the leadership of the organization.

Ensuring Transparency

The Sarbanes0Oxley Act changed the way businesses had to manage and ensure the accuracy and sanctity of financial data and reports. Before SOX was implemented the businesses had to submit reports that were accurate. If the auditor found an issue, they could then do an in-depth investigation. The problem was that if the older data had been deleted or changed it would be impossible to do an in-depth audit. Another problem was that there was no way to check whether a record was in its original state or had been changed. Even if changes were detected, there was often no way to determine who had changed the records. This was a major vulnerability and was exploited by a few organizations.

The Sarbanes-Oxley Act required businesses to not just keep important records for five years but also track each alteration within the records. If any financial report is edited, if some data is removed, or if any new information is added, then the organization is required to keep a record of what was changed, when it was changed, and who changed it. This ensures that if there is a problem in the records the auditors will be able to identify the time and the person that introduced the problem in the record. This requirement is built to make sure that no business will be able to modify or manipulate data.

How Compliance Technology Helps

Compliance management systems have several features which make it easier for businesses to ensure SOX compliance. The most basic features which help with compliance include data security and electronic audit trails.

Data Security

Any business that wants to comply with SOX needs to protect the financial data from being accessed or edited by any unauthorized party. Compliance management solutions with built in document control features allow organizations to limit access to documentation. Businesses can also control what selected employees are allowed to do with secure records. Some employees may have full editing access, others may be able to view and share the records, while some may be limited to only viewing the records.

Electronic Audit Trails

Compliance management platforms keep track of the changes being made to all the documents that exist within the system. This means that they track who opens a file, who edits it, shares it, and so on. This means that businesses which use compliance management platforms have detailed records for all the edits made and have no problem in demonstrating the transparency of the framework. The records are also more trustworthy because they are generated by the system without any interference from any company employee.

Dedicated SOX Compliance Solutions

Compliance management platforms make it easier to ensure SOX compliance, but dedicated SOX tools go one step further and automate the reporting process as well. SOX compliance tools and solutions focus on the workflow required for SOX compliance. They provide a platform where all disclosures can be collected, assessed, and reported. Dedicated SOX solutions make the whole process flow smoothly while at the same time making it easy for businesses to show auditors that they have a strong SOX compliance framework in place.

Wondering how your organization can ensure SOX compliance? Get in touch with out compliance experts for a demonstration.