Compliance and risk management

Sarbanes-Oxley Compliance

SOX Implementation, Optimization, Compliance, and Technology

What is SOX?

The Sarbanes-Oxley Act, commonly known as SOX, is a US federal law enacted in 2002. The law aims to protect investors and the public from accounting fraud by imposing strict requirements on public companies and accounting firms.

SOX was introduced in the wake of the Enron scandal, which exposed the accounting fraud committed by the energy company. The scandal led to the collapse of Enron and caused significant damage to investors, employees, and other stakeholders. SOX was enacted to restore investor confidence in the financial markets and prevent future accounting scandals.

Who does SOX apply to?

Sarbanes-Oxley applies to all public companies registered with the Securities and Exchange Commission (SEC) and their accounting firms. The law imposes strict requirements on these companies, including establishing internal controls, certifying financial statements by CEOs and CFOs, and disclosing any material changes to financial conditions.

Why is SOX compliance important?

First and foremost, Sarbanes-Oxley helps to protect investors and the public from accounting fraud. By requiring companies to establish strong internal controls and ensure financial statements' accuracy, SOX helps prevent financial misstatements and misrepresentations that can harm investors and other stakeholders.

Ultimately, SOX promotes better corporate governance within organizations. Companies that comply with SOX are seen as more trustworthy, which can improve their reputation and attract more investors.

Get Started with a SOX Assessment
What are Non-Compliance Risks?

Non-compliance can result in severe consequences, including:

  • Fines and penalties. Companies found to be non-compliant with SOX regulations may face substantial financial penalties, ranging from thousands to millions of dollars.

  • Criminal charges. In extreme cases, corporate officers found guilty of non-compliance can face imprisonment.

  • Loss of investor confidence. Non-compliance can lead to a loss of trust from investors, resulting in decreased share prices and, potentially, bankruptcy.

  • Reputational damage. The negative publicity surrounding non-compliant companies can severely impact their reputation, hindering future business opportunities and growth.

  • Pre- and Post- Acquisition Advisory

  • Regulatory Compliance Audits

SOX Compliance Requirements

To ensure compliance with SOX, companies must adhere to several key requirements, including: 

  • Establishing and maintaining a robust internal control structure for accurate financial reporting.

  • Implementing procedures for the periodic evaluation and testing of internal controls.

  • Certification by the company's CEO and CFO that the financial statements and disclosures are accurate and complete.

  • Regular audits by an independent auditor to assess the effectiveness of the company's internal control structure.

  • Proper documentation and record retention to support the company's financial statements and internal control processes.

  • Implementing a comprehensive whistleblower policy that allows employees to report suspected fraudulent activities without fear of retaliation.

To help businesses meet SOX compliance requirements, Clearview Group provides various SOX services and support:

SOX Compliance Services
Internal Controls Optimization
Workiva Integrated Risk
SOX Staff Augmentation
Process Enhancement
Policy and Procedure Advisory
Voluntary Disclosures
Voluntary Disclosures

Compliance and Risk Management Resources

See what a relationship with Clearview can do for your business.

We are a full-service management consulting and CPA firm covering all aspects of audit, compliance, risk management, accounting, finance, tax, IT risk, and more. Just let us know what you need help with and an expert will be in touch!

Request Your Consultation Today