SOX Compliance and J-SOX Audit

What is SOX Compliance (Meaning of SOX)?

In 2002, the United States Congress passed the Sarbanes-Oxley Act (SOX) to protect shareholders and the general public from accounting errors and fraudulent practices in enterprises, and to improve the accuracy of corporate disclosures. The act sets deadlines for compliance and publishes rules on requirements.

What is J-SOX?

The Financial Instruments and Exchange Act or J-SOX is the Japanese equivalent of SOX in Japan that the organizations in Japan need to comply with.

SOX compliance and J-SOX compliance are not just legal obligations but also good business practices. Companies are required to operate ethically with limited access to internal financial systems.

Why are SOX Compliance and J-SOX Audit & Compliance Needed?

 SOX/J-SOX provides the framework for organizations for financial recording and reporting, which in turn improves many aspects of the organization.  SOX compliance help companies report that the financial reports are more predictable, which makes stockholders contended. Companies also report that it makes access to capital markets much easier due to their improved financial reporting.

SOX compliance or J-SOX compliance improves cross-functional communication & cooperation between teams involved with audits.

Applicability of SOX Compliance/SOX Audit/SOX Controls:

• SOX applies to all publicly traded companies in the United States as well as wholly-owned subsidiaries and foreign companies that are publicly traded and do business in the United States.
• Private companies, charities, and non-profits are generally not required to comply with all of SOX.
• Private companies that are planning an Initial Public Offering (IPO) should prepare to comply with SOX before they go public.

 Applicability of J-SOX Compliance/J-SOX Audit/J-SOX Controls:

• All listed companies in Japan are required to perform risk assessments and prepare & submit internal control reports on a consolidated basis starting with the fiscal years commencing on or after April 1, 2008.
• The reach of J-SOX extends to subsidiaries outside Japan (in the USA and Europe for example) because the provisions apply to the company as a whole.
• The subsidiaries outside Japan are involved in the testing and documentation of internal processes and controls.

If you’re looking for SOX auditor/SOX audit or JSOX audit firms in India, then our comprehensive SOX or JSOX advisory services are there to help you remain compliant:

 Our offerings under SOX Audit & Compliance and J-SOX Audit & Compliance:

Project Management/Outsourcing: The process of outsourcing the documentation arrangement for SOX testing by the other country auditor

SOX and J-SOX Risk Control & Assessment Matrix: Identifying and analyzing potential events that may negatively impact individuals, assets, and/or the environment; and making judgments “on the tolerability of the risk-based on a risk analysis” while considering influencing factors

• Identifying processes
• Entity-level controls
• Business controls, and information technology (IT) general controls
• Identifying key and missing controls

SOX & J-SOX Control Documentation & Framework: Document control refers to a series of practices to ensure that documents are created, reviewed, distributed, and disposed of in a systematic, verifiable manner

• Testing key controls and documenting results
• SOX risk control testing & assessment to minimize waste and cost while ensuring compliance
• Developing a customized SOX process based on unique requirements
• Remediation of control gaps

Detailed SOX & J-SOX Control Compliance Testing: Periodic, independent, and objective assessment of compliance-related processes and/or controls to ensure whether the elements, processes, and controls of the Compliance Programme are de-signed appropriately and are operating as designed.

Remediation of Control Weakness: Development of written policies & procedures, perform reconciliations regularly, adequate training to employees, and perform self-evaluation of defined Internal controls. These include:

• Network diagrams
• Process flow charts
• Narratives for general computing controls

Implementation: Implementation of Control Framework is defined in the previous stages including testing results failures. These include:

• Readiness assessments
• Documentation and testing assistance
• Sustainability assessments
• Training to support a successful SOX 404 compliance program

Areas of Review:

• Finance & Accounts incl. Capital Expenditure
• Information Technology & General Controls
• Statutory Compliances
• Logistics & Distribution
• Order to Cash
• Procure to Pay
• Hire to Retire
• Production & Inventory Management

Key benefits of our SOX and J-SOX Advisory Services:

 SOX:

• More Reliable Financial Reporting
• Reduced Financial Statement Restatements
• Improved Stock Price Performance
• Reduced Cost of Capital
• Continuous Improvement of Internal Processes and Control Structure

 J-SOX:

• A deeper understanding of what controls are in place and how they are operated
• Improvement in the effectiveness and efficiency of operations including process and control automation and the further identification of duplicate and redundant controls
• Opportunity for enhancing internal audit in the areas of operational efficiency and nonfinancial reporting by leveraging the knowledge and experience gained through the SOX compliance.

Also Read:-

• Internal Controls over Financial Reporting
• Brief introduction on Internal Financial Controls over Reporting | IFC | ICFR

Our SOX/JSOX Service Deck:- Applicability of SOX and J SOX

To know more about SOX and J-SOX Audit Compliance and Reporting Services Watch this video