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What is SOX?
SOX or Sarbanes – Oxley Act of 2002 is titled after its authors Senator Paul Sarbanes and Representative Michael Oxley. This act came about in response to major corporate accounting scandals where in prominent American companies took advantage of lack of such regulatory law being in place. SOX Act was passed with the purpose of building and restoring public confidence in the financial reports of American corporations. The landmark law is designed to improve corporate responsibility and accountability, enhance financial reporting and disclosures, and ensure auditor independence. Failure to adhere to the act can result in devastating consequences; in some cases the damage done can be irreversible. |
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Why does SOX require Document
Management?
The inevitable need of a Document Management Software is strongly sensed throughout the Sarbanes – Oxley Act. Section 404 of Sarbanes-Oxley emphasizes the importance of documents and records management and assessment. Sections 103, 104 and 801 necessarily require appropriate filing, retention and preservation of audit records. Section 105 requires that these records must also be easily retrievable. Section 408 states that the Securities Exchange Council (SEC) will review an organization’s financial records on a regular and systematic basis for the protection of the investors. This Act also affects non-listed US companies across the world as businesses are looking to grow globally, both organically and inorganically. When SOX compliant companies decide to go for mergers, acquisitions, joint ventures or even just holding stakes in another company, more and more businesses are increasingly looking at firms that are SOX-ready. This means that all establishments today must have top-notch accounting and reporting processes in place. |
