The Idea Behind SOX
Emerging from some of the most notorious and costly corporate scandals history has shown to date, the Sarbanes-Oxley Act of 2002 (SOX) was created to re-build public and investor confidence in national securities markets.
Currently SOX only applies to publicly traded companies and publicly traded non-U.S. companies who do business in the U.S. However, by winning favor among investors and the general public, private companies are beginning to monitor effects of SOX more closely.
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To accomplish this, businesses, particularly those in the financial services industry, are to adhere to a new set of accountability standards, requiring businesses to:
- Implement internal controls which guarantee reliability and confidentiality of financial data.
- Report the effectiveness of internal controls by conducting regular compliance audits.
- Exercise thorough and sound IT practices to ensure security of information during storage and transport.
Put simply, SOX compliance policies forces companies to maintain a superior level of operational integrity.