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The Sarbanes–Oxley Act of 2002 (SOX) commonly called Sarbanes–Oxley, Sarbox or SOX, is a United States federal law that set new or expanded requirements for all U.S. public company boards, management and public accounting firms. There are also a number of provisions of the Act that also apply to privately held companies, for example the willful destruction of evidence to impede a Federal investigation.

 

SOX requires the chief executive officers (CEO) and chief financial officers (CFO) of public companies to attest to the accuracy of financial reports (Section 302) and require public companies to establish adequate internal controls over financial reporting (Section 404). Passage of SOX resulted in an increased focus on IT controls, as these support financial processing and therefore fall into the scope of management’s assessment of internal control under Section 404 of SOX.

 

Section Title Description
302 Corporate Responsibility for Financial Reports Certifies that financial statement accuracy and operational activities have been documented and provided to the CEO and CFO for certification
404 Management Assessment of Internal Controls Operational processes are documented and practiced demonstrating the origins of data within the balance sheet. SOX Section 404 (Sarbanes-Oxley Act Section 404) mandates that all publicly traded companies must establish internal controls and procedures for financial reporting and must document, test and maintain those controls and procedures to ensure their effectiveness.
409 Real-time Issuer Disclosures Public companies must disclose changes in their financial condition or operations in real time to protect investors from delayed reporting of material events
802 Criminal Penalties for Altering Documents Requires public companies and their public accounting firms to retain records, including electronic records that impact the company’s assets or performance.

 

Fines and imprisonment for those who knowingly and willfully violate this section with respect to (1) destruction, alteration, or falsification of records in federal investigations and bankruptcy and (2) destruction of corporate audit records.

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