Question - What is SOX (Sarbanes Oxley)?
Answer -
Sarbanes-Oxley is a US law passed in 2002 to strengthen corporate governance and restore investor confidence. Act was sponsored by US Senator Paul Sarbanes and US Representative Michael Oxley.
The Sarbanes-Oxley Act is legislation enacted in response to the high-profile Enron and WorldCom financial scandals to protect shareholders and the general public from accounting errors and fraudulent practices in the enterprise. Sarbanes-Oxley defines which records are to be stored and for how long. The legislation not only affects the financial side of corporations, but also affects the IT departments whose job it is to store a corporation’s electronic records. The Sarbanes-Oxley Act states that all business records, including electronic records and electronic messages, must be saved for “not less than five years”. The consequences for non-compliance are fines, imprisonment, or both. IT departments are increasingly faced with the challenge of creating and maintaining a corporate records archive in a cost-effective fashion that satisfies the requirements put forth by the legislation.
Organizations should be able to guarantee the integrity of some of their operations like PTP or OTC which can have quiet a significant impact on the way the financial statements are projected if not controlled.
Organizations today are thereby moving in direction of automating their softwares for SOX compliance. A key factor towards achieving SOX compliance is to seperate the duties amongst individuals to such an extent that no one person has the authorization to fulfill a complete cycle say procurement or sales.