In 2002, the U.S. Congress passed the Sarbanes-Oxley Act (SOX) to protect shareholders and the public from accounting errors and fraudulent practices in companies and to improve the accuracy of corporate disclosure. The law sets deadlines for compliance and publishes rules on requirements. Congressmen Paul Sarbanes and Michael Oxley drafted the bill in an effort to improve corporate governance and accountability in the face of financial scandals that have occurred at Enron, WorldCom and Tyco, among others. Section 404 is the most complicated, controversial, and expensive part of all SOX compliance requirements. It requires that all annual financial reports include an internal control report showing that management is accountable for an “adequate” internal control structure and a management assessment of the effectiveness of the control structure. “(c) CRIMINAL SANCTIONS. Every person who “(1) confirms a statement under paragraphs (a) and (b) of this section, knowing that the periodic report accompanying it does not meet all the requirements set out in this section, is liable to a fine of not more than $1,000,000 or to imprisonment for a term not exceeding 10 years, or both; or “(2) wilfully certifies a report in accordance with paragraphs (a) and (b) of this section, knowing that the periodic report accompanying the report does not meet all the requirements set out in this section, is liable to a fine of not more than $5,000,000 or imprisonment for a term not exceeding 20 years, or both. As compliance technology becomes more accessible, more and more banks are asking how they can use this technology to improve their bottom line. This approach is commendable and integrates very well with the modular compliance solutions that are in vogue today. Their modular nature means that companies can implement a use case and scale as needed.

A software solution that meets compliance requirements must be able to monitor data, enforce policies, and log every user action. With quality leads, all the data necessary for compliance is in place. Protect your data and your business with a software solution that ensures SOX compliance and can rest a little more relaxed during your next audit. Compliance is not something the company has to achieve once. It is an ongoing task that requires the organization to follow a strict routine. SOX compliance requires regular reporting and disclosure. This means that the entire organization must ensure that requirements are met on a regular basis. A routine should be established to make it easier for the compliance team to provide the required information in a timely manner.

In other words, management is personally responsible for ensuring that all reporting obligations are met. SOX compliance helps senior management quickly assess compliance status, ensure data accuracy, and monitor compliance issues. It protects not only the organization, but also the leaders within the organization. The Sarbanes-Oxley Act of 2002 was passed by the U.S. Congress with the goal of protecting consumers and the public from malicious or negligent businesses. The general SOX compliance requirements are intended to ensure that companies are transparent in financial reporting and that there are more formal rules to prevent fraud. Section 906 of the SOX Act requires the Chief Executive Officer (CEO) and Chief Financial Officer (CFO) to provide a written representation. This declaration must be accompanied by a periodic report, which is also required by law. The contents of the written statement under Section 906 “certify that the periodic report containing the financial statements satisfies the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78d or 78o (d)) and that the information contained in the periodic report is adequately presented in all material respects, the financial position and results of the issuer. Finally, SOX compliance is a good test because it benefits not only the compliance team, but also the organization`s senior management. One of the strictest SOX requirements in Section 906 states: Ensure that all employees, old and new, are regularly trained on the best management of financial data, including SOX requirements.

A bill passed by the U.S. Congress in July 2002 to restore investor confidence after high-profile bankruptcies like Enron, which put CEOs, CFOs and auditors under rigorous scrutiny. The law applies to certain U.S. and foreign SEC-registered companies (including banks). For a while, it was thought that this would only apply to companies in the United States, but after the Parmalat fiasco, there is now pressure to pass similar legislation in Europe, so it may well be that unaffected companies will soon be affected. Sarbanes-Oxley is the most significant piece of legislation affecting corporate governance, financial disclosure and accounting practices since the U.S. securities laws of the early 1930s. It aims to reduce fraud and conflicts of interest while increasing financial transparency and public confidence in the marketplace. Sarbanes-Oxley is a law that carries the threat of fines and jail time for senior executives whose organizations do not comply. The most important aspect of the act is section 404.

Meeting SOX compliance requirements is not only the law, but also the best practice for more ethical and secure operations. Implementing SOX financial security controls is not only the right thing to do, but it also has the added benefit of helping to defend against data security threats and attacks. SOX compliance solutions allow banks to see how workflow and document management are managed. Modern compliance management solutions integrate document management systems. These systems not only make the process faster, but also more audit-friendly, as all changes to documents are saved in the system. This helps SOX compliance a lot, as keeping a log of changes to financial documentation is a critical requirement of SOX compliance. Section 802 provides penalties of up to 20 years` imprisonment for altering, destroying, maiming, concealing, and falsifying financial records, documents, or physical objects with the intent to obstruct, obstruct, or influence judicial investigations. In addition, penalties of up to 10 years will be imposed on accountants, auditors or any other person who knowingly and intentionally violates the retention requirements of all audit or audit work for a period of 5 years. IT, particularly in the banking sector, will be one of the sectors most affected by the SOX Act in 2005. According to Chapter 404, virtually everyone in a bank is considered part of the financial information infrastructure! Section 404 covers both business lines and finance, as virtually all of the information in the financial statements comes from the entity. For example, the integrity of interest income depends on the controls in place, from the initiation and approval of a loan to the collection of interest income, general ledger accounting and reporting in the financial statements.

The standard required for compliance is very high and requires a bank to provide detailed documentation and demonstrate that procedures are understood and risks are controlled and managed.