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Governance, Risk, Audit & Privacy · Foundational

Sarbanes-Oxley Act (SOX)

2002 US law requiring public companies to maintain and attest to internal control over financial reporting.

Definition

SOX was enacted after the Enron and WorldCom scandals. Section 302 requires CEO and CFO certification of financial reports, Section 404 requires management assessment and, for accelerated filers, auditor attestation of internal control over financial reporting, and Section 906 adds criminal penalties for false certifications. It created the PCAOB. IT general controls over financial systems are a major part of SOX testing.

Example

A public company tests ITGCs for its ERP each year to support its SOX 404 assessment.

Exam tip

SOX applies to US publicly traded companies, not private companies or nonprofits.

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