The Sarbanes-Oxley Act of 2002 was designed to control the record-keeping systems that businesses are required to maintain. The act was passed to combat the slew of financial scandals that were committed by large companies like WorldCom and Enron. SOX controls the record-keeping process for large public companies and ensures that data is kept for a sufficient amount of time. The SOX Act also controls the type of information that is released about customers and shareholders, helping to protect their identity.
The Sarbanes-Oxley Act was initially inspired to help combat the increasing number of fraud cases in large public companies. SOX requires that big companies begin focusing on record-keeping and controlling the process of information storage. SOX requires that IT departments monitor and control all aspects of information storage and recall. IT departments and protocols were thoroughly renovated at the passing of the SOX Act, making them the gatekeepers of business data.
SOX instilled a deeper understanding of data protection and control in large companies. Companies now control and protect user and customer data on a much deeper basis, which protects against fraud and identity theft. These measures now require multiple pieces of security information from inquirers and prevent unauthorised users from accessing sensitive information. The record-keeping requirements of SOX also help companies track down perpetrators in investigations.
SOX compliance requires that all account records and transactions be stored for at least five years. Having these transactions stored in an unaltered state allows for the investigation and audit from authorities in the case of purposed fraud. Record-keeping has been enforced by SOX compliance and has helped reduce the amount of financial scandals. Record-keeping has also increased the amount of scrutiny that CEOs and other mangers are put through.
Audits are performed by SOX compliance agencies and monitor the record-keeping policies of both the accounting and IT departments. It is necessary for companies to submit financial transaction and account modifications. Departments must submit requested data in a timely manner for audits. If information is omitted or incomplete from audits, managers are subject to noncompliance.
Noncompliance with SOX audits and investigations is taken as a serious offence. Both jail sentences and large fines can punish noncompliance with SOX regulations. Audits are performed on all records and monitor the record-keeping procedures of the company, and any breach of these procedures can be found to be a violation of the SOX compliance act.