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After 20 Years, Are the Rules of the Sarbanes-Oxley Act Still Viable?

After 20 Years, Are the Rules of the Sarbanes-Oxley Act Still Viable?

For many, the name “Enron” is notorious, as its bankruptcy and bad practices (amongst those of other companies of the time) ultimately led to the passing of the Sarbanes-Oxley Act of 2002. Hard to believe that was almost two decades ago! Let’s dive into what the act outlines, and how it remains relevant today.

What Does the Sarbanes-Oxley Act Do?

This bipartisan act addressed the way that publicly traded companies can report their revenue. Updating decades-old laws, accountants were given new requirements in terms of how they could provide company boards with information—requirements that called for the involvement of IT.

IT is needed because there are a lot of compliance requirements that the act (abbreviated as SOX, or SOx) places on companies, requirements that dictate how their technology infrastructure is configured so data can be transferred securely and privately. While compliance to SOx is a necessary and positive endeavor for businesses to follow, it is important to consider if SOx is still pertinent to the modern business environment. Despite its importance, there are some pros and cons of the Sarbanes-Oxley Act.

Sarbanes-Oxley Act, in Today’s Context

Nowadays, any publicly traded companies, wholly-owned subsidiaries, and foreign companies that do business in the United States are beholden to SOx, along with the firms that perform audits on these companies. Naturally, while SOx doesn’t typically apply to private companies, charities, or not-for-profits, these organizations should also refrain from falsifying information.

SOx and its maintenance have gradually cost businesses more and more in both monetary costs and in the necessary time invested. Fortunately, today’s businesses have the opportunity to mitigate these rising impacts through technology improvements, using data and automation to meet their needs and make their necessary procedures more efficient.

As 2021 Continues, SOx Needs to Be Prioritized

Moving forward, it is critical that all those organizations that are beholden to the requirements have the tools in place to uphold them and strive to understand SOx.

We can help—not only can we ensure that your business is able to efficiently maintain compliance to SOx, but we’ll also do whatever we can to optimize your cybersecurity and other IT controls. We work with a wide variety of businesses throughout South Dakota to help them meet and exceed industry-specific security compliance standards. Reach out to us at 888-891-4201 to discuss what we can do for you in more detail today.

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