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Understanding and Achieving SOX Compliance
Question of the month: Do you understand the meaning of the term “internal controls?”
The internal controls requirement in Sarbanes-Oxley Section 404 has created the most uncertainty and distress in businesses. Frequently those of us involved in office processes are not accustomed to having our work planned and verified to the degree that is common on most factory floors. Creating and implementing an internal control system does not have to be a daunting task. Start small and build it slowly – layer by layer.
How Demanding Is Sarbanes-Oxley (SOX) Compliance?
To a degree, the confusion over SOX seems inordinate in relation to the complexity of the regulation. Actually, compared to the intricacy of other regulations enforced by the Securities and Exchange Commission (SEC), Sarbanes-Oxley compliance is relatively straightforward. It is somewhat hard to understand why there is so much misunderstanding about Sarbanes-Oxley, so let’s review the basics.
Read more about Sarbanes-Oxley Compliance…
Can Risk Management Build Internal Controls?
Using risk management techniques is an important component in creating the internal controls required for compliance with Sarbanes-Oxley (SOX) Section 404. Risk management includes all the activities associated with identifying and reducing risk, as well as coping with negative events should they occur. Identifying risks and creating systems and safeguards to ameliorate them is one way to create a basic internal control system.
Read more about risk management and internal controls…
How to Develop Accounting Procedures for Internal Control
When you hear the phrase “internal control system required by Sarbanes-Oxley (SOX) Section 404,” do you automatically think of policies and procedures? Simply having Accounting policies and procedures does not indicate an internal control system. Well-written procedures that document well-defined processes, however, are an important component of the internal control system you are building.
Read more about the role of accounting procedures…
On That Note;
Answer to this month’s question: While internal controls is a rich topic with several levels of meaning and connotation, the most important premise behind internal controls is understanding your processes and knowing if they are effective (achieving what they should achieve). This can apply to the office (accounting, sales & marketing) as well as the factory floor. Frequently, internal processes run continually without check and metrics that provide information on effectiveness. Processes that are not monitored and adjusted to ensure effectiveness are not in control.
Please feel free to contact us with any questions or comments. Also, please let us know if you’d like any specific topic addressed in our future articles.
Regards,
Chris
Bizmanualz
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