SOX – the Sarbanes-Oxley Act

To increase transparency in financial accounting at major corporations, the United States government has introduced new legislation - the Sarbanes-Oxley (SOX) act. T-Systems can help your business achieve SOX compliance.

All companies listed on the US stock exchange must meet the demands of SOX. Under the law, passed in 2002, businesses must assess and document the effectiveness of their internal accounting controls.

SOX was introduced in the wake of several corporate financial scandals involving publicly traded companies. It is designed to ensure that financial reports are reliable, and data cannot be manipulated. The United States Securities and Exchange Commission (SEC) requires all companies trading on the US stock exchange to comply for the first annual financial report after July 15, 2006.
 
SOX also impacts all publicly traded non-US companies that do business in America: they, too, must prepare to meet the strict requirements. And in the EU, the introduction of a corresponding directive is also being considered. This would provide reliable guidance for investors and increase trust in corporations.

Few are able to comply

Currently, only a small number of businesses across the world are able to fulfil the requirements of SOX. Documenting internal financial controls is a difficult task: companies need cast-iron data security, and must ensure that information is not manipulated in any way. For many, this entails major organizational effort and huge expense.

SOX also requires all CEOs and CFOs to officially declare that published data is accurate and the internal control system reliable. This applies to all financial data, including assets, earnings and cash flows. Once data has been certified, it must be saved so that it cannot be changed or manipulated. The penalties for disclosing and certifying false information are severe: anyone doing so faces civil and criminal charges.