eBook+-+SOX+Compliance+Checklist

SALIH AHMED ISLAM

The Sarbanes-Oxley Act (SOX) imposes strict
requirements on publicly traded companies to
ensure financial transparency, prevent fraud,
and protect investors. Below is a
comprehensive checklist to help organizations
comply with SOX regulations effectively.
1. Financial Reporting Compliance
CEO and CFO Certification (Section 302)
CEOs and CFOs must sign a certification
for each periodic financial report filed with
the SEC. This certification must attest that:
The report is accurate and does not
contain material misstatements.
Internal controls over financial
reporting (ICFR) have been established
and tested.
Any identified weaknesses or
deficiencies in controls have been
disclosed.
2

Internal Controls Assessment (Section 404)
Documentation of Internal Controls: Map
out all processes that impact financial
reporting, such as accounts payable,
accounts receivable, and payroll.
Testing of Controls: Conduct walkthroughs
and sample testing to verify that controls
are functioning as intended.
Independent Audit: Engage external
auditors to evaluate the design and
effectiveness of ICFR and issue an opinion.
Accurate and Timely Financial Reporting
Use financial reporting systems that ensure
compliance with Generally Accepted
Accounting Principles (GAAP) or
International Financial Reporting Standards
(IFRS).
Implement controls to review journal
entries, account reconciliations, and
financial statements before submission.
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2. Internal Controls and Risk Management
Document Internal Controls
Create detailed flowcharts or narratives for
processes impacting financial reporting.
Ensure all controls address specific risks,
such as fraud, data manipulation, and
operational errors.
Perform Risk Assessments
Identify areas with a higher likelihood of
error or fraud, such as cash transactions or
inventory management.
Use risk assessment frameworks like COSO
or ISO 31000 to evaluate and rank risks.
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Segregation of Duties (SoD)
Design job roles to ensure that no single
individual can control all stages of a
financial transaction. For example:
One employee initiates a transaction.
Another approves it.
A third reconciles the account.
Monitor Access to Financial Data
Conduct regular audits of system access
logs to ensure compliance with the
principle of least privilege.
Implement multi-factor authentication for
critical systems to enhance security.
3. Audit and Documentation Requirements
Audit Record Retention (Section 802)
Retain records like financial statements,
audit workpapers, and internal control
documents for at least five years.
Use secure digital storage solutions with
redundancy to prevent data loss. 5