How Compliance Technology Helps Uphold Core SOX Compliance Principles

The inspiration behind the rules we follow are often forgotten while the rules keep getting followed. Most people are aware of the laws that their business must follow, but few will know why the laws were created. Many of these laws are decades or even more than a century old. The Sarbanes Oxley act is a bit different from most regulations because it is very recent and the circumstances that resulted in its creation are also surprisingly recent.

Much has been written about SOX compliance and there are many dedicated SOX compliance management tools that businesses can use. What is often overlooked in this conversation is how the goals of SOX compliance and compliance technology overlap. The intertwined goals of the Sarbanes-Oxley act and compliance technology are linked because they are both trying to increase the transparency and trustworthiness of compliance management.

Sarbanes Oxley and True Transparency

The Sarbanes-Oxley act was passed after infamous accounting scandals. This was a necessary step because it hurt the trust that people had in the financial system. The financial system is not just a part of the national economy – the financial system powers the national economy. The robust financial system takes investments from hard working people across the country and spreads these investments into profitable businesses. The investors make a profit on what they invested while businesses get the funds they need to grow at a faster pace.

Scandals like Enron not only hurt the people that were directly affected but also the rest of the economy. The general public believes that businesses tell the truth when it comes to finances. This belief is essential, because it is this belief that motivates people to invest in businesses and markets.

How SOX Ensures Transparency

The accounting scandals that came to light exposed a major vulnerability in the compliance framework. Businesses were supposed to submit financial documents which would then get audited. However, a lot of businesses were cozy with big audit firms.

SOX requires public disclosures by businesses that ensure transparency. The SOX act also requires the leadership of the organization to be liable for its accounting and financial information. This means that the CEO and CFO will be held responsible for any problems in the financial disclosures.

The business must also keep track of any edits or changes made in the financial document and disclose the changes that have been made. This approach ensures that businesses are transparent. It was extremely important to create a business environment where people trusted businesses enough to invest in them and the SOX act has been successful in achieving these goals.

Compliance Technology and Transparency

Compliance technology is aimed at ensuring transparency and making compliance issues easier to detect and resolve. Tech based compliance management frameworks have built in features that directly fulfill many SOX requirements in spirit. Some of these features include:

Monitoring

Compliance solutions monitor the compliance framework and documents continuously. This ensures that parties responsible for SOX compliance are accountable and collaborating in one tool.

Transparency

Some compliance management solutions have built-in document management systems that provide versioning, access control and workflow capabilities. Documents can be linked to associated regulations or obligations, expiration dates can be managed, and document owners can be identified. Policies, procedures, checklists, templates, audit reports and types of risk and compliance documents can be stored to provide a single document repository. These documents can also be linked to any risk or compliance activity or task as well, and all types of documents including PDF, Word, Excel and JPG file formats can be stored.

The intertwined nature of SOX with compliance technology is also why many compliance solutions now have SOX modules. It is easy to ensure compliance with SOX requirements when the compliance framework in the organization already fulfills most of the requirements. Interested in seeing how your organization can simplify SOX compliance? Get in touch with our compliance experts for a demonstration of Predict360 Quarterly Certifications and Attestations, the dedicated SOX compliance tool by 360factors.