SOX Compliance Checklist: Free PDF Download | safety culture (2023)

What is the SOX Compliance Checklist?

A SOX compliance checklist is a tool used to assess compliance with the Sarbanes-Oxley Act, or SOX, enforce information technology and security controls, and uphold legal financial practices. Publicly traded U.S. companies, international companies with debt or equity, listed on the U.S. Securities and Exchange Commission registered and third party financial service providers to the above companies are required to ensure compliance with SOX to protect investors, increase transparency in corporate governance and build public trust.

SOX Compliance Checklist: Free PDF Download | safety culture (1)SOX Compliance Checklist: Free PDF Download | safety culture (2)
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In this article

  • What is the Sarbanes-Oxley Act?
  • What is the internal SOX control?
  • SOX compliance in 2020
  • What are the requirements for a SOX audit?
  • What is the difference between SOX and J-SOX?
  • What is the SOX procedure?
  • What are the SOX compliance requirements?
  • How to use the SOX compliance checklist
  • Digital solution to proactively ensure SOX compliance
  • Selected SOX compliance checklists

What is the Sarbanes-Oxley Act?

ÖSarbanes-Oxley Act of 2002, also known in the Senate as the "Accounting Reform for Public Enterprises and Investor Protection Act" and in the Chamber of Deputies as the "Accounting and Corporate Responsibility and Auditing Act", was named after its founders Senator Paul Sarbanes (D.-Md). and Representative Michael Oxley (R-Ohio). The US Congress passed SOX because of the accounting scandalsEnron,WorldCom, zArthur Andersen, between others.

The US SEC enforces SOX to prevent deceptive business conduct, such as B. keeping large debts off the balance sheet, underestimating line costs by capitalizing instead of accounting, and augmenting revenue by false accounting entries, ultimately leading to millions of dollars in fines and criminal convictions.

What is the internal SOX control?

According to SOX Section 404, each annual financial report must include an internal control report stating that management is responsible for establishing and maintaining an adequate internal control structure and procedures over financial reporting. Each internal control report must also include management's assessment of the effectiveness of the above structure and procedures and disclosure of safeguards, breaches and errors, verified and reported by accredited external auditors.

SOX compliance in 2020

The SEC's latest rule, which would exempt more categories of companies from Treasury audit certification, was in effect since April 27th, 2020.The adoption of changes was decided to reduce the compliance burden for companies, especially the most complicated, controversial and expensive to implementSOX Abschnitt 404: Management's Evaluation of Internal Controls.

This change means that certain non-revenue companies can submit a management assessment of the effectiveness of their management to the ICFR without an independent auditor's endorsement. The SEC estimated 539 companies would be exempt, saving compliance costs and potentially encouraging more companies to go public.

However, investors will likely factor the loss of internal control audit certification into their equity risk premium, prompting them to buy equities at higher discount rates due to the increased risk of potentially weak internal controls. Ultimately, compliance with SOX 404 can be summed up in a nutshell a previous press release from the SEC:

“Congress never intended the 404 process to be inflexible, onerous, and useless. The purpose of Section 404 is to provide investors with meaningful disclosure of the effectiveness of a company's internal controls without creating unnecessary compliance burdens or wasting shareholder resources.”

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What are the requirements for a SOX audit?

The audit includes reviewing the controls, policies, and procedures of a 404, as well as reviewing employees, their roles and job descriptions, and whether they have received appropriate training in accessing financial information securely. Sections 302, 404 and 409 of the Sarbanes Oxley Act require the following conditions to be monitored, recorded and audited:

  • internal control
  • network activity
  • database activity
  • Login Activity
  • account activity
  • user activity
  • access to information

Failing a SOX compliance audit can result in significant fines and penalties that can damage the company's reputation.

What is the difference between SOX and J-SOX?

J-SOX is the Japanese equivalent of the US Sarbanes Oxley Act. The SOX and J-SOX regulations are designed to evaluate internal control systems related to financial reporting. While there are similarities in their standards and requirements, both have their differences. These include the internal control framework, the assessment approach, the scope of the entities, the scope of the process, etc.

What is the SOX procedure?

All companies subject to SOX are required to submit the Section 404 IFCR, while some assessments of management effectiveness of smaller reporting entities may be submitted in the IFCR without a Section 404 endorsement by an external auditorthe last rule of the SEC. Private companies preparing for their initial public offering (IPO) must also comply with the Sarbanes-Oxley Act.

additionallyUS SEC Corporate Finance Divisionconducts some review of each reporting entity at least every three years and reviews a significant number of entities more frequently.

What are the SOX compliance requirements?

Because SOX compliance is critical to keeping your business running, here are the other sections of Sarbanes-Oxley to focus on:

  • SOX Section 302: Corporate responsibility for financial reporting
    A company's Chief Executive Officer or CEO and Chief Financial Officer or CFO are directly responsible for the accurate documentation and certification of all financial reports filed with the SEC. Establishing audit committees, compensation committees, and disclosure committees composed of directors, and obtaining good legal advice can help strengthen internal controls and limit the company's liability.
    Because SOX Section 302 is designed to protect against financial misreporting, please ensure that your auditable security controls that prevent data tampering, schedule and track access to data are operational, regularly audited for effectiveness, and capable of detecting security breaches .
  • SOX Section 401: Disclosures in Periodic Reports
    All company financial statements in periodic reports must be prepared with any relevant off-balance sheet liability, commitment or transaction, audited by an accredited public accounting firm and made available to the public.
  • SOX Section 409: Real-Time Issuer Disclosures
    Any changes in a company's financial condition or operations must be reported in near real time, using trending and qualitative information and graphical representations to protect investors and the public interest.
  • SOX Section 802: Criminal Penalties for Altering Documents
    Penalties of up to 20 years in prison are provided for anyone who alters, destroys, mutilates, conceals, conceals, or falsifies any record, document, or tangible property with intent to influence, obstruct, or impede a legal investigation. Any auditor who fails to retain audit documentation for a period of 5 years will be subject to a fine and/or imprisonment for not more than 10 years.
  • SOX Section 906: Corporate responsibility for financial reporting
    All company financial statements in periodic reports must be certified by the CEO and CFO, in addition to the written statement required by Section 302, that they fully comply with the requirements and that the information therein fairly presents the financial condition and results of the company's operations. Company.

SOX Compliance Checklist: Free PDF Download | safety culture (5)

SOX Compliance Checklist | safety culture

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How to use the SOX compliance checklist

Because SOX compliance is critical for public companies, it is important for an organization to have a standardized approach when it comes to tracking its own compliance. A SOX compliance checklist allows organizations to list their compliance points and avoid overlooking critical areas that could lead to non-compliance with the law. However, using it on a highly intuitive platform increases your documentation, accuracy and speed.

Steps to using the SOX compliance checklist

Effective SOX compliance follows these steps:

  1. Set up relevant management team roles -Identify who will conduct SOX audits or inspections to ensure smooth internal implementation of the law.
  2. Identify compliance areas -Adapt your checklist to SOX compliance requirements. Use this as a solid foundation to ask the right questions and identify critical points in your approach to ensuring and maintaining compliance.
  3. Determine if the button controls work -Verify that currently implemented systems are working by choosing Yes, No, or N/A. Businesses can even customize their own responses.
  4. Identify potential areas of non-compliance -This document enables the management team to proactively identify violations and evaluate how they can be improved and avoided in the future.
  5. Enter additional comments –Before signing, add recommendations, suggestions or comments to further strengthen your organization's approach to SOX compliance.

Digital solution to proactively ensure SOX compliance

Ensuring that you are compliant with the Sarbanes-Oxley Act can be challenging as the burden of proof of compliance rests on your management's shoulders. Proactively ensure SOX compliance with an inspection and remediation solution that takes minutes to learn, so you can easily assess where you stand, react to issues early, and have confidence in your internal controls from the start. WithSafetyCulture (formerly iAuditor), you can enjoy the following benefits by signing up for free today:

  • Convert paper documents to digital formats with easesmart scanor customize pre-built industry templates with theDrag-and-Drop-Editor
  • Use SOX compliance checklists anytime, anywhere and on any mobile device, even offline
  • Take or attach photographic evidence of the effectiveness of the internal control structure and procedures for financial reporting and annotate images for better visual reference
  • assign actionswith a priority level and due date to immediately correct the potential SOX non-compliance
  • Automatically generate and secure SOX compliancecloud reportsand share them with key stakeholders with a tap of your finger

Selected SOX compliance checklists

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Download free template

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A SOX audit checklist is a tool used by internal auditors to review the implementation of security controls, with a focus on Section 302: Corporate Responsibility for Financial Records and Section 404. Use this checklist to:

  • Evaluation of the company's security measures to prevent data tampering;
  • track access to data;
  • detect security breaches; It is
  • Appropriate measures for disclosure to SOX auditors.

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SOX risk assessment checklist

This SOX risk score can be used to assess factors that could put the company at high risk of fraud. Use this checklist to aRisk assessment of misstatements resulting from fraudulent financial reporting, addressing threats to financial stability or profitability from company economic, industry or operational conditions and undue pressure from management to comply with third party requirements and misappropriation of assets, highlighting adverse relationships between the company and employees with access to money or other theft-prone assets that could motivate those employees.

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SOX risk assessment model

It's SOXrisk assessment modelcan be used by IT and data security professionals to conduct security risk and vulnerability assessments on internal IT systems. Use this template to determine the source or vulnerability of threats such as hardware or software failures, human error, and intentional internal or external behavior, identify controls in place, and recommend alternative risk mitigation options.

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Audit checklist

Download free template

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This ready-to-use financial audit template can be used by companies to conduct an audit of their accounting and financial elements. It is ideal to use an audit checklist when conducting these checks to ensure that none of the key points that need to be checked are overlooked. Additionally, this template is easily customizable for users and organizations.


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