Avoid Fines With This SOX Compliance Checklist

The issue of SOX compliance has become a very real consideration in the corporate risk management landscape over the past couple of decades. This should come as no surprise when you consider all that’s at stake: SOX non-compliance can lead to fines in the millions and even jail time. However, a comprehensive SOX compliance checklist can go a long way toward achieving and maintaining compliance, especially if you pair this checklist with a SOX compliance software platform. 

What is SOX Compliance and Why is it Important? 

SOX refers to the Sarbanes-Oxley Act, which was passed in 2002 on the heels of several high-profile scandals involving major financial institutions. Legislatures sought to increase accountability and improve transparency in the corporate world. SOX achieves this by requiring the compilation and submission of annual audits and reports. 

The measures that are required to become SOX compliant also serve to improve security, especially as it relates to a company’s data. Without appropriate record-keeping, auditing, and data-handling protocols in place, achieving SOX compliance is virtually impossible. 

With so many moving parts, the road to achieving and maintaining SOX compliance is no doubt challenging. That’s where a good SOX compliance checklist comes into play. 

Checklist #1 – Choosing a SOX Compliance Framework

Frameworks involve a step-by-step approach to managing SOX compliance. These frameworks are typically built into SOX compliance software platforms too. The two most common SOX frameworks are COBIT and COSO. 

COBIT — which stands for Control Objectives for Information and Related Technologies — was created by an organization called ISACA. The framework has four components: plan and organize, implement and acquire, deliver and support, and monitor and evaluate. 

COSO — which stands for Committee of Sponsoring Organizations of the Treadway Commission — is ideal for establishing the internal controls that SOX compliance demands. The COSO framework has five components: environment control, risk assessment, control-related activities, information and communication, and monitoring activities. 

Selecting a framework or a SOX compliance software platform is the first order of business as you work toward achieving SOX compliance. 

Checklist #2 – Risk Assessment

SOX compliance is closely intertwined with risk management. Therefore, if a company is going to avoid non-compliance fines, it is imperative that decision-makers have a solid understanding of the threats and vulnerabilities that are confronting the organization. This includes internal risks that are rooted within a business and external risks stemming from the outside world. 

The risk assessment process ought to include leaders from all of a company’s departments and divisions. This ensures that all vulnerabilities and threats are identified and appropriately ranked in terms of severity. The severity of a given threat will largely determine how and when it is addressed as the company works toward SOX compliance. 

Risks take many forms and the vulnerabilities involving your data and your IT division as a whole are going to have a significant impact on SOX compliance. This is an area where a good risk management software platform can bring tremendous benefits because it will feature tools for identifying and assessing risks. Many risk management software systems also include project management-type features that allow for the tracking of risk mitigation efforts. 

Checklist #3 – Establishing Data Governance Policies

SOX compliance requires good data governance. However many organizations simply don’t take the time to develop formal data governance policies. Others may have a policy in place, but it is outdated or staff may simply lack awareness that the policy even exists.

Data governance policies must outline the company’s approach to collecting, storing, and accessing data. The policy needs to include elements such as clear directives for how long data is retained, and how data is gathered and stored, along with guidelines that indicate who can access different types of data. 

Checklist #4 – Implementing Internal Controls

SOX compliance requires the establishment of internal controls that are designed to protect data and maintain its integrity. Good record-keeping and data retention practices are essential for achieving SOX compliance. In short, a company must protect the data that it is using in the course of its annual audits and mandatory SOX reports. 

An organization is free to use whatever measures it deems necessary to implement internal controls. Automation is an increasingly popular choice. By automating internal controls, you’ll streamline the process while simultaneously eliminating much of the burden that would otherwise fall on the shoulders of the IT department and those who are tasked with handling the yearly SOX report and related audits. 

Checklist #5 – Managing Data Access

Data security is a key consideration when it comes to achieving SOX compliance. Determining who can access specific types of data — and under what circumstances —  is a big part of a well-designed data management policy. SOX compliance is most easily achieved in this area through the implementation of a “least privilege” policy.

Least privilege policies limit data access and introduce processes that facilitate monitoring, auditing, and reporting. With this approach,  individuals are only permitted to access the data that is required to get the job done — nothing more and nothing less. This limits unnecessary exposure to sensitive data stores and it’s conducive to SOX compliance. 

Companies may also consider the implementation of a privileged access management system that can be used in tandem with a least privileged policy. Privileged access management not only creates an audit trail but also introduces processes and mechanisms for responding to a data breach or other similar event.

Once you’ve completed this SOX compliance checklist, it’s time to begin implementing measures that will allow you to achieve compliance.

At iTech, we’re experts in risk management software, including SOX compliance software solutions. The right technology can make a world of difference when it comes to handling risk management and SOX compliance efforts. Reach out to iTech today and let’s discuss your SOX compliance and other regulatory compliance needs. Together, we’ll develop an innovative solution that will minimize risks while simultaneously helping your business avoid costly SOX non-compliance fines and penalties.