When the Sarbanes-Oxley Act (SOX) was enacted, implications for information technology (IT) organizations were hardly top of mind. Expected to restore confidence in the financial integrity of public companies, the act followed a spate of scandals that rattled stockholder confidence and the market with it. Intended to improve the transparency, accuracy and integrity of corporate financial reporting, SOX requires publicly held companies to create and maintain effective internal controls, subject to regular audit by independent agents. Procedures and reporting structures must protect corporate assets from potential loss or fraud through improved communication, systems, processes, policies, measures and reporting. The act also establishes personal accountability for chief executive officers (CEOs) and chief financial officers (CFOs) who are responsible for providing real-time, accurate disclosure of any event that could materially impact company financials, including earnings and shareholder value. SOX primarily affects public companies, but those that may engage in a future merger, acquisition or initial public offering (IPO) must also plan to comply.
The key to achieving SOX compliance lies within IT, which is ultimately the single resource capable of responding to the charge to create effective reporting mechanisms, provide necessary data integration and management systems, ensure data quality and deliver the required information on time. The good news is that benefits associated with the investment required to improve data integrity, streamline processes and produce the reporting structures necessary to assure compliance extend beyond improving shareholder confidence and meeting the letter of the law. Providing the robust reporting, data quality and data integration environment required to ensure compliance will support other, perhaps more strategic initiatives by generating higher integrity, more reliable data and, hence, better quality business intelligence (BI). Improved data flows and reporting capabilities can also be leveraged to monitor the progress of various departments, initiatives or lines of business as well as to track performance.
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