What is SOX 404? | Compliance, Key Sections & Strategies

Compliance with the SOX federal law and its related regulations is a complex process with numerous nuances. A limited understanding of SOX requirements can increase non-compliance risk, leading to considerable frustration among practitioners. However, navigating SOX compliance challenges can be entirely achievable with a well-structured approach, thorough planning, and the right tools.

In this article, we aim to help you understand one of the most critical parts of the law—the Sarbanes Oxley 404 section provisions. This understanding should help you achieve your compliance goals.

What is SOX 404?

Sarbanes-Oxley Act section 404 focuses on internal controls over financial reporting (abbreviated as ICFR), also knows as SOX controls. Its key purpose is to require public companies to establish, maintain, and assess internal controls to enhance the accuracy and reliability of their financial reporting, protecting investors and maintaining the integrity of the U.S. financial market. The section requires management and external auditors to report on the effectiveness of the company’s internal controls over financial reporting.

Objective 1: Enhancing investor confidence through accurate financial reporting

Protecting investors is one of the two objectives behind SOX Section 404. This involves implementing controls that:

• Foster trust among already existing and potential investors in the company’s financial reporting
• Mitigate potential negative impact on investors in cases where market stability is threatened due to corporate scandals.

Investors aim to evaluate a company’s financial performance, the liquidity of its common stock, and overall value effectively. They also seek assurance that management certifies the company’s audited and unaudited financial operations.

A company with ineffective ICFR is likely to be excluded from potential investment opportunities due to the lack of investor confidence and reliability of its disclosed financial statements from an investor’s perspective.

Objective 2: Promoting transparency and accountability in financial markets

The second objective of Section 404 is to protect financial markets. This translates to inducing fairness, transparency, stakeholder accountability, and rejecting dishonest practices to ensure the stability of the U.S. financial market.

If applied on a large scale and enforced by government institutions, proper internal controls help reduce accidental errors and intentional fraudulent tampering of financial information. This naturally makes the financial system more transparent and lowers the systematic risk of significant disruptions and market fluctuations.

Benefits of SOX Section 404

Compliance with Section 404 of the Sarbanes-Oxley Act of 2002 is crucial for achieving overall SOX compliance. It offers many considerable benefits, including improved alignment of strategic business objectives and a strengthened company reputation. Non-compliance, on the other hand, can damage a company’s reputation, lead to hefty regulatory fines, and even expose employees to potential criminal penalties.

Improved accuracy and reliability of financial reporting

Well-designed internal controls are a key part of the company’s proactive strategy for ensuring the accuracy of financial reporting. Reliable financial operations, as reflected in annual statements, enable top management to make more informed decisions, minimize the need for restatements, reduce the stress associated with business risks, and attract investment capital with greater confidence.

Strengthened internal control systems

Achieving SOX compliance ensures that internal controls are tested to function effectively and meet established quality standards. It fosters trust in the company’s leadership and encourages business leaders to maintain high standards of control over financial reporting.

Reduced fraud and operational inefficiencies

SOX compliance reduces the risk of financial fraud, enhances internal corporate culture and ethics, and enhances the company’s appeal to employees and investors.

Increased investor trust and market stability

Increased investor trust expands strategic flexibility by broadening the business planning horizon and offering stronger protection for senior management with established reputations for reliability. On a global scale, this trust contributes to the stability of the country’s financial system and reduces the risk of significant market disruptions.

Alignment with strategic business objectives

The SOX-compliant status of a company helps leaders better define and align their business goals and objectives, enabling timely transitions to more secure courses of action. This is guided by SOX 404 requirements, assessment principles, identified inefficiencies, and recommended improvements.

Key Provisions of SOX 404

The provisions of the SOX Act under Section 404 provide only the basic principles. The Securities and Exchange Commission (SEC) interprets and explains them. Let’s dive into the specifics of Section 404, covering its three key points, requirements, terms, and explanations based on the SEC’s detailed clarifications.

Section 404(a): Management assessment

Section 404(a) addresses management’s assessment of internal controls over financial reporting.

Here, “management” refers to an organization’s CEO and CFO (or equivalent executives), who are responsible for implementing and ensuring the effective operation of internal controls over financial reporting. This responsibility is formally established by including a statement in the company’s annual report filed with the SEC.

The CEO and CFO are also accountable for evaluating the effectiveness of these internal controls.

Finally, “internal controls” refer to any necessary measures, processes, corporate policies, and technologies that ensure the effectiveness and transparency of corporate financial reporting and prevent financial fraud.

Section 404 (a) applies to all publicly traded companies operating under U.S. jurisdiction, regardless of size, including all wholly owned foreign branches, subsidiaries, or affiliates.

Requirement for annual internal control assessment

Section 404 of the Sarbanes-Oxley Act requires companies to conduct an annual evaluation of the effectiveness of their financial reporting processes and controls. This evaluation is typically performed through interim and year-end audits, with the results meticulously documented and analyzed by the company’s senior management and an external auditor. During the final annual audit, special attention is given to processes and systems demonstrating higher risks during the interim audits.

Focus on financial reporting risks and internal control frameworks

The company’s management and external auditors should rely on selected risk evaluation procedures to assess the effectiveness of the company’s ICFR. The procedures and the auditor’s attestation techniques should address direct and indirect financial reporting risks. Specific risk assessment frameworks are applied to provide structure to these evaluations. We’ll cover these assessment frameworks below.

Section 404(b): Auditor attestation

Section 404 (b) requires an external auditor to review management’s assessment of internal controls and attest in the annual report whether the evaluation is adequate.

Role of external auditors in verifying management’s internal control assessment

An independent auditor must be engaged to examine the existing internal controls and assess how management evaluated them for the annual SOX compliance filing. The auditor uses a top-down approach to verify that the controls are operational and practical. The auditor’s report will highlight any material weaknesses or significant deficiencies identified during the SOX 404 audit.

Suppose the auditor identifies inadequate measures to ensure the transparency of financial reporting or deficiencies in management’s assessment of controls. In that case, the company may attempt to implement the auditor’s recommendations for improvement before filing the annual report to improve the overall auditor’s opinion.

Standards for attestation and independence

The contracted auditor must be completely independent of the company and not be part of the company’s internal compliance committee. This ensures an unbiased auditor’s review. Additionally, the auditor must not provide the company with any non-audit services.

The Public Company Accounting Oversight Board (PCAOB) requires assurance that the selected auditor can perform their duties competently and provide accurate, credible conclusions. For instance, external auditors must comply with the PCAOB’s AS 2201 standard. This is one reason a company should aim to engage a trusted audit firm with a strong reputation for SOX audits.

Section 404(c): Applicability and exemptions

Under the “Dodd-Frank” Act of 2010 (Public Law 111–203), companies that do not qualify as “large accelerated filers” or “accelerated filers” are exempt from the SOX Section 404(b) requirements. These companies are not required to engage an independent auditor to attest to management’s assessment of internal controls over financial reporting. Specifically, the following types of companies are excluded from Section 404 (b) requirements:

Non-accelerated filers

These are publicly traded companies with a public float valued at less than $75 million. Public float (free float) refers to the number of outstanding shares available for trading, excluding restricted stock.

Smaller reporting companies

These are traded companies with a public float of less than $250 million or companies with less than $100 million in annual revenue and less than $700 million in public float, which are not required to calculate public float.

Emerging growth companies

These companies have been publicly traded for fewer than five years and generated less than $1.07 billion in revenue in the most recent fiscal year.

Unlisted companies

Companies not listed on the U.S. stock exchange are not required to comply with SOX Section 404(b) or SOX requirements overall.

Since these criteria are subject to change, companies should regularly review the latest rules and definitions provided by the SEC and the PCAOB.

Best Practices for SOX 404 Compliance

Compliance with SOX Section 404 requires a structured, deliberate approach and significant resource allocation. While extensive practices have been developed, they can be challenging to navigate. Below, we outline some best practices, including the most widely used SOX compliance framework.

Internal control processes

Under SOX, particularly Section 404, internal controls are the actions and processes a company implements to manage the risks of financial misstatements – accidental or intentional. While organizations may develop a variety of internal controls to comply with laws, protect their reputation, safeguard overall business health, and promote ethical behavior, Section 404 of SOX emphasizes controls to prevent financial fraud, falsification, and inaccuracies in annual financial reporting.

Controls related to information technology are especially critical, as most financial transactions occur digitally. Key IT-related practices include:

• Monitoring access to key business systems,
• Ensuring reliable data backup processes,
• Implementing robust file and document-sharing policies,
• Establishing measures to identify and address cyber threats.

The specific internal controls required are not universally defined and depend on the organization’s unique needs. Each company subject to SOX compliance must identify its key control areas and independently design, implement, monitor, and document controls tailored to its operations. Experts should evaluate these areas to develop a comprehensive compliance program.

Adoption of recognized frameworks

Using a compliance framework to assess the effectiveness of the company’s internal controls over financial reporting is a common practice for preparing for SOX compliance. Many organizations rely on established frameworks like COSO, COBIT, and ISO 27001 to structure and enhance their risk assessment procedures, which are proven to support the development and evaluation of internal controls.

A framework provides a well-defined set of principles that facilitate a comprehensive assessment of how processes function. This concept can be understood similarly and applied across many organizations. Any framework should offer clear criteria for identifying risks and evaluating processes within the scope of a specific area and objective—in our case, ensuring the accuracy and reliability of corporate financial reporting.

Regulatory bodies like the SEC do not mandate the use of any framework. Companies subject to the SOX compliance process may choose any preferred framework, provided it is impartial, well-developed, and provides fair quantitative and qualitative evaluations of internal control performance. However, the SEC requires disclosure of the framework used for management’s assessment of controls.

The COSO framework and its key internal control components

The COSO framework is one of the most widely adopted and recognized SOX compliance frameworks. The SEC acknowledges that it satisfies SOX requirements. This framework is extensive, comprising hundreds of pages of guidance and explanations. The proposed controls align closely with SOX Section 404, focusing on risk management in an evolving business environment.

One of the framework’s foundational components is the control environment. This top-down approach emphasizes credibility, integrity, ethics, and commitment to establishing adequate controls that must be set by the company’s senior leadership and board of directors. These values are then communicated through all organizational levels.

The second key component is risk assessment. This pillar requires organizations to actively identify and mitigate risks, maintain a risk register, develop mitigation plans, and incorporate strategic, operational, financial, and compliance risks into decision-making. Risk assessment should be an ongoing practice carried out by an internal audit team or external auditors.

The third component is control activities. It focuses on implementing processes and actions to address identified risks. These activities must become a routine practice across various organizational levels. Examples include technological safeguards like user role segregation in IT systems to implementing risk mitigation procedures and damage control measures to address risks.

The fourth pillar, information and communication, underscores the importance of timely and high-quality information dissemination. It includes clear internal communication about compliance goals, role-specific responsibilities, and prompt disclosure of potential data breaches or financial violations.

Finally, monitoring activities. Regular monitoring and ongoing evaluation of established controls are essential to verify their effectiveness. Monitoring should be periodic and comprehensive but can also involve selective reviews. Results must be reported promptly to the company’s leadership, enabling corrective action to address any identified deficiencies.

SOX 404: Other best practices

Other best practices for achieving SOX Section 404 compliance include conducting interim internal audits, identifying and testing risks, and leveraging IT technologies to monitor data access, segregate roles and duties, and identify vulnerabilities – particularly within financial systems and processes involved in finalizing financial reporting.

Developing a risk-based testing schedule for internal audits

Control testing should be performed regularly throughout the fiscal year, with a final round of testing conducted at year-end before finalizing the financial statements. This testing should include both specific SOX 404 controls designed to ensure the integrity of financial information and general IT controls, such as key account configurations, role and duty segregation, and access authorization. High-risk areas identified during interim audits should be re-tested at year-end.

Utilizing automated tools for continuous monitoring

Testing the effectiveness of internal controls is challenging without specialized monitoring technologies. Automated tools can assist by providing analytical platforms, systems to detect anomalies in data access and usage, alerting mechanisms for suspicious activities or account behaviors, and other features that enhance oversight and risk management.

Establishing a process for addressing deficiencies

Deficiencies can vary in severity, ranging from minor issues to material weaknesses that significantly impact the accuracy of financial reporting. All deficiencies should be carefully documented and analyzed. Once identified, corrective measures must be implemented promptly to address and resolve issues, ensuring ongoing compliance and reliability in financial reporting processes.

SOX 404 Compliance Process

Section 404 of the Sarbanes-Oxley Act requires companies to:

• Implement internal controls over financial reporting
• Conduct regular internal evaluations of these controls.
• Obtain independent auditor attestation on the effectiveness of the controls.
• Address any discovered deficiencies.
• Submit evidence of compliance to the SEC.

But where should organizations begin? Achieving compliance with Sarbanes Oxley Act Section 404 involves several critical steps.

Planning and scoping

The first step involves defining the control objectives and determining the scope of control implementation. This includes identifying key areas such as critical IT systems, key users, primary financial processes and sub-processes, and other potential risks of material weaknesses. Existing controls are reviewed to assess their relevance and effectiveness. Scoping these significant areas lays the groundwork for establishing a compliance program, selecting an appropriate framework, estimating required resources and budget, and forming a project.

During this phase, involving key stakeholders is essential. C-level executives provide overarching insights into the company’s processes and influence controls related to corporate governance. IT specialists contribute expertise on system vulnerabilities and strengths, while the accounting and finance teams focus on the intricacies of financial processes.

Execution

Once control objectives are defined and the plan is scoped, the next step involves implementing and documenting internal controls. The selected framework, such as COSO, guides the documentation and execution of control measures, policies, procedures, and technological safeguards.

Effectiveness is ensured through:

• Regular monitoring and evaluation.
• Information sharing between key stakeholders, the compliance team, and executives.
• Risk assessment methodologies to test the implemented controls, identify missing components, deficiencies, and material weaknesses, and develop solutions to close any identified gaps.

Specialized IT tools are often employed to facilitate control testing and risk management. Key participants are continuously trained to ensure alignment with the compliance program’s goals.

At a particular stage, when sufficient confidence has been achieved in internal assessments, an external auditor is engaged to assess the compliance program and its internal evaluations independently. Any identified issues and risks should be remediated promptly, whether pre-audit or during the audit.

Analysis and reporting

SOX compliance is not a one-time activity but a continuous process. Under SOX, internal controls must be evaluated annually, resulting in a report filed with the SEC authorities.

Throughout the year, companies must regularly identify risks, monitor controls, analyze processes, and keep findings documentation.

Senior management plays a critical role by ensuring the quality of internal evaluations and overseeing any corrective actions necessary to address compliance risks. As the fiscal year closes, formal control testing, documentation, and assessment are conducted, with the results forming the basis of the annual filing with the SEC.

Annual reporting requirements: Form 10-K and audit reports

The Sarbanes Oxley Section 404 requires filing an annual report with the SEC that includes a detailed management assessment of internal controls over financial operations. The report is submitted using Form 10-K and must meet the following requirements:

• Identification of the individuals responsible for overseeing the implementation and operation of internal controls
• Specification of the selected framework for evaluating the effectiveness of the controls
• For companies required to comply with Section 404(b), the independent auditor’s attestation report must include an external auditor’s attestation confirming the adequacy of management’s internal control assessment.

The submission deadlines for Form 10-K depend on the size of the organization:

• For large accelerated filers: within 60 days after the fiscal year ends.
• For accelerated filers: within 75 days after the fiscal year ends.
• For non-accelerated filers: within 90 days after the fiscal year ends.

In addition to annual findings, SOX-compliant companies must instantly report any confirmed or suspected cyber security incidents and data breaches. This is reported using Form 8-K (or Form 6-K for Foreign Private Issuers) and must be submitted no later than four business days after discovering a material impact.

Compliance Costs

Achieving SOX compliance involves significant financial investment, with many public companies incurring annual costs ranging from hundreds to millions of dollars. However, the consequences of a failed audit, a data breach, or significant deficiencies in financial reporting can be far more severe. These risks include reputational damage, loss of investor trust, criminal charges for senior management, delisting the company from the stock exchange, and hefty fines.

The recurring compliance costs are driven by the extensive control measures that must be integrated into an organization’s daily operations. These measures require meticulous planning, time, and the involvement of costly experts, such as external audit firms, alongside investments in specialized IT solutions. The initial preparation phase can be expensive as it requires significant efforts to assess the current state of compliance, upgrade systems, train personnel, and establish new processes.

In the worst-case scenario, compliance costs can exceed budget projections, especially if an external audit uncovers significant gaps in the effectiveness of internal controls. Companies are then compelled to allocate additional resources to address these deficiencies. Organizations must invest in thorough preparation and well-calibrated compliance efforts to minimize the risk of unforeseen costs.

Balancing compliance costs with the benefits of enhanced reporting accuracy

The benefits of SOX compliance, discussed earlier, warrant further emphasis. Achieving compliance is not optional – it is a legal requirement for public organizations and private companies planning to go public. The challenge lies in balancing the costs while gaining all the advantages mentioned.

Beyond meeting regulatory requirements, achieving SOX compliance proves that a company effectively manages risks and is prepared to navigate potential challenges in the broader business landscape. Compliance underscores the organization’s commitment to robust practices and processes that protect it from cyber threats, internal financial fraud, and unfortunate errors. For most companies, these benefits outweigh the associated costs.

Role of technology in reducing costs

Minimizing SOX compliance costs while maintaining program effectiveness is a priority for most companies. Several strategies can help achieve this balance:

• Involving stakeholders and senior management early. Creating a strong team of leaders and influencers can prevent cost overruns and inefficiencies. Early engagement allows leadership to align on program goals and fosters collaboration. Providing comprehensive compliance training ensures clarity and reduces the likelihood of costly missteps. This approach simplifies implementation and mitigates risks.
• Adopting a recognized compliance framework. Frameworks, such as COSO or COBIT, help ensure a structured approach to SOX compliance. These frameworks are tailored to the objectives of SOX compliance with a focus on risk identification and control testing. A proven framework provides clear guidance, reducing the likelihood of errors or inefficiencies.
• Leveraging IT automation tools. Compliance encompasses entity-level business processes, technical operations, financial transactions, and data management, where automation can drive efficiency. For example:
  • Platforms for educating compliance stakeholders with quality training materials. Systems that monitor access to sensitive financial information detect cybersecurity incidents or track the company’s progress toward SOX compliance.Systems for automating business processes, reducing the human factor, and increasing process transparency and efficiency. Software tools that can help mitigate risks of unauthorized access to critical data and protect against data theft, loss, or falsification.
  • Alerting systems for cyber incidents that keep companies informed and allow them to proactively address errors and threats, which helps avoid data breaches and fines.

Regulatory Guidance, Future Trends, and Implications

Advancements in information technology, shifting business practices, evolving cyber threats, and the introduction of new protective measures compel legislative authorities to adapt existing compliance standards and establish new ones. Companies must stay informed of these regulatory changes to ensure business continuity and maintain compliance.

SEC guidance for smaller companies

Smaller public companies benefit from somewhat relaxed requirements supported by government regulators who provide specific guidance. For example, the SEC has issued the Sarbanes-Oxley Section 404 – A Guide for Small Business to help smaller entities with info on compliance obligations. Additionally, the Committee of Sponsoring Organizations of the Treadway Commission (COSO) has published the Guidance for Smaller Public Companies Reporting on Internal Control over Financial Reporting, with commentary available on the American Institute of Certified Public Accountants (AICPA)) website. Furthermore, smaller public companies are exempt from Section 404(b) requirements, as noted earlier.

Trends in regulatory compliance and corporate governance

While government regulators traditionally adopt new technologies slowly, they remain aware of significant advancements, such as breakthroughs in artificial intelligence (AI), blockchain, and emerging cyber threats. Many regulatory standards and frameworks continue to evolve, aligning with modern challenges.

For example, the COSO recognizes the rapid development of AI technologies and their impact on threat detection and risk assessment. The SEC also addresses AI’s rise, promoting AI innovation and creating new AI governance programs.

RegTech (regulatory technology) solutions are increasingly recognized for their ability to enhance compliance monitoring. This includes safeguarding sensitive personal information, integrating environmental, social, and governance factors into corporate compliance, and promoting ethics and whistleblower protection.

Companies are becoming more strategic in selecting IT solutions to address compliance challenges. They are investing in AI-powered tools, focusing on seamless integration, and leveraging advanced predictive analytics to manage risks, prevent financial fraud, and enhance real-time treatment monitoring.

How Pathlock Helps with SOX Compliance

Pathlock Cloud is a leading technology solution designed to help organizations automate compliance processes. It addresses important SOX requirements, especially in financial reporting, access management, and audit trails.

I. Implement Internal Control Over Financial Reporting (ICFR) with Pathlock

This is the core of SOX compliance. Auditors assess the effectiveness of controls designed to ensure the accuracy and reliability of your financial reporting. Key areas within ICFR include:

• Risk Assessment: How the company identifies and analyzes risks to financial reporting, and how it manages those risks. Pathlock AAG helps identify and assess access-related risks, while CCM allows for ongoing monitoring and analysis of those risks.

• Control Activities: The specific actions taken to address risks, such as approvals, authorizations, verifications, reconciliations, reviews of operating performance, and segregation of duties. AAG automates key control activities such as user provisioning, movement and deprovisioning of users. It provides elevated access management, user access reviews, certifications and role management which improves efficiency and accuracy. CCM consolidates controls, continuously monitors the effectiveness of these controls and provides risk quantification in financial terms.

• Information and Communication: How the company communicates financial reporting responsibilities and information, both internally and externally. Pathlock provides reporting information that supports audit responses for some compliance requirements like the U.S. Securities and Exchange Commission cybersecurity rule of July, 2023 requiring rapid disclosure of material breach information.

• Monitoring Activities: Ongoing evaluations of the effectiveness of internal controls, including periodic audits and reviews. Pathlock provides real-time monitoring of violations of business process controls and IT general controls. Monitoring of changes to configurations, settings and master data and the ability to configure custom events to monitor across all transactions is a key differentiator.

II. Implement IT General Controls (ITGCs) with Pathlock

These controls support the effective operation of the ICFR by ensuring the reliability of IT systems. Key areas within ITGCs often include:

• Access Controls: Restricting access to systems and data to authorized personnel only. This includes logical access (passwords, multi-factor authentication) Pathlock provides access restrictions based upon access risk analysis and compliant provision supported by role management.

• Change Management: Ensuring that changes to IT systems are authorized, tested, and implemented in a controlled manner to prevent unintended consequences. Pathlock monitors changes to IT configuration settings and master data, including the original value, the adjusted value, and values that have been deleted.

• IT Security: Implementing measures to protect IT systems and data from unauthorized access, use, disclosure, disruption, modification, or destruction. This includes things like firewalls, intrusion detection systems, and security awareness training. Pathlock provides Cybersecurity Application Controls that include vulnerability management, threat detection and response, and transport control to protect IT systems and data. Some areas of IT Security, like firewalls and security awareness training, are covered by other solutions.

III. Implement Entity-Level Controls (ELCs) with Pathlock

These are controls that operate across the entire organization and have a pervasive impact on the control environment. Examples include:

• Fraud Prevention Program: Implementing measures to deter, detect, and prevent fraud. Pathlock provides Continuous Controls Monitoring to monitor Separation of Duties violations that a user actually did do supported by risk quantification and mitigation steps to prevent fraud.

IV. Implement Disclosure Controls and Procedures with Pathlock

These controls ensure that the company meets its obligations to disclose material information to investors in a timely and accurate manner. This includes:

• Completeness and Accuracy of Financial Reporting: Ensuring that all material information is included in financial reports and that it is free from material misstatements. Financial Reporting includes reporting of financial transactions that occur outside of the Governance, Risk and Compliance area.

• Timeliness of Reporting: Meeting deadlines for filing financial reports with the SEC. Pathlock provides real-time reporting that supports SEC reporting that relates to compliance with disclosure material breaches within the SEC cybersecurity rules.

• Internal Reporting: Providing management with the information it needs to make informed decisions about financial reporting. Pathlock provides information about Separation of Duties violations and the monitored transactions to support accurate reporting.

V. Conduct SOX Audits with Pathlock

SOX audits may also cover areas such as:

Remediation of Deficiencies: Developing and implementing plans to correct any control deficiencies identified during the audit. Pathlock allows you to identify control deficiencies and correct them in advance of an audit. Accountability provides management with tools to confirm the financial reports’ accuracy and confidence.

Fraud Risk Assessment: Identifying and assessing the risk of fraud within the organization. Pathlock provides Continuous Controls Monitoring to monitor Separation of Duties violations that a user actually did do supported by risk quantification and mitigation steps to prevent fraud.

Conclusion

Section 404 SOX is widely recognized as one of legislation’s most critical, complex, and costly aspects. There are valid reasons for this – its internal control measures over financial reporting significantly enhance financial market resiliency, protect investments, and promote a healthier business environment.

Achieving SOX compliance is challenging and costly, particularly with Section 404 requirements, yet it remains necessary for public companies. Fortunately, well-established methodologies and frameworks support organizations in this endeavor. In addition, advanced technology and innovative products help automate many tasks related to monitoring and testing internal controls over financial reporting.

To ensure SOX compliance, public companies should clearly understand what is SOX 404, stay at the forefront of legislative updates, including countless explanatory documents and best practices, and rely on the best IT tools to ease compliance program execution and reduce costs.