Warning We use cookies to personalise ads and to analyse our traffic. We also share information about your use of our site with our advertising and analytics partners.

Accept our cookies and get unlimited access.

What Is Sox Compliance?

SOX complianceSOX compliance

SOX compliance refers to the Sarbanes-Oxley Act of 2002, enacted into federal law by the United States Congress as a reaction to corporate accounting scandals. The most notorious of these was the bankruptcy of Enron in 2001. Many of Enron’s stock holders lost their fortunes after investing heavily when the company claimed revenues topping more than $100 billion in the preceding year. These figures were obtained using rather creative, some would say unscrupulous, accounting practices. Corporate executes were able to escape relatively unscathed as a result of purported insider trading.

The SOX Act hopes to prevent another Enron-style scandal in the future by requiring corporate officers to assume personal responsibility for the accuracy of their financial reports. The Act also provides for enhanced disclosure of financial information, including disclosure of off-balance-sheet transactions and the private stock transactions made by corporate officers. Some portions of the act spell out more clearly the definition of certain types of corporate crime under federal law. Title IX of the 2002 SOX Act also provides stiffer punishments for white collar crime. Title VIII and XI deal with fraud accountability. The end goal of SOX compliance is to ensure that public investors know the true condition of the company they are investing their money in and protect the national economy.

SOX compliance is overseen by the Public Company Accounting Oversight Board. It is a non-profit corporation that oversees the auditors of publicly traded companies. They maintain a registry of accounting businesses that are certified as corporate auditors and conduct regular inspections of companies included on their registry. Violations of SOX protocols are justification for levying a fine of up $100,000 on the individual auditor and up to $2 million against the audit firm found in violation. Companies that have been found in violation of SOX compliance protocols may be forced to report to the SEC and their stock holders.

Privately held companies do not need to concern themselves with SOX compliance. It applies only to companies that are publicly traded on the stock market or those with plans to go public in the near future. However, many of the standards corporations must meet to ensure SOX compliance for financial accounting are good best practices for any business.

Finding the best refinance rates on your home mortgage will take some shopping around to find the best terms. It also will...
Finding the best refinance rates on your home mortgage will take some shopping around to find the best terms. It also will require some work on your part so that you can qualify for the refinancing package that best suits your needs and wallet. Things You Can Do to Get the Best Refinance Rates A priority for anyone in the market for a refinance loan, and for their own general financial health, is to raise your credit score and to lower your debt. Often, these issues go hand in glove, so it is possible to accomplish both at once. Raising your credit score...
A poor credit score can hinder a person's ability to access credit from mainstream lenders. Unfortunately, about 56% of American...
A poor credit score can hinder a person's ability to access credit from mainstream lenders. Unfortunately, about 56% of American consumers have a low credit rating. Fortunately, there are other ways of accessing funds even with a low credit score. These include: Try a Credit Union Compared to banks, credit unions have more lenient credit requirements that make them ideal lenders for consumers with bad credit. In addition, credit unions generally offer better interest rates compared to banks, according to figures published by Informa Research Services....
A home equity loan can be handy when it comes time to finance a major life expense like home remodeling, a child’s college...
A home equity loan can be handy when it comes time to finance a major life expense like home remodeling, a child’s college education, or maybe even purchasing an investment property. This is the time when you get to reap the benefits of all those years paying a monthly mortgage. In simple terms, this type of loan allows you to borrow against your home, using the capital you have sitting in it as collateral. As with any other type of loan, banks have stringent lending procedures, but if you’ve been tending properly to your credit score and other areas...