Organizations are required to comply with an ever-increasing number of regulations. In the US, one of the most widely-reaching is the Sarbanes-Oxley (SOX) Act, which applies to all public companies within the US.
The purpose of SOX is to ensure that investors in these public companies are protected against fraudulent activity. In order to achieve SOX compliance, an organization is required to maintain complete and transparent records of all of their financial dealings. The intention of the SOX Act is to ensure that scandals like Enron never happen again, where the company destroyed documents to prevent evidence from falling into the hands of the US Security and Exchanges Commission.
Under SOX, an organization is prohibited from destroying certain types of documents and required to retain them for a certain number of years. Each year, the organization’s CEO and CFO are required to provide a report on the company’s current financial status, and the penalties for inaccurate reporting are steep. As a result, an organization needs a high level of visibility into its financial data in order to generate correct reports for SOX.
Most Organizations Don’t Automate SOX Compliance
All public US companies are required to comply with SOX. However, the law does not specify how they have to perform the data collection and processing necessary to generate their reports. As a result, many organizations are taking a manual approach to data collection and report generation for SOX compliance. According to a recent survey, 47% of organizations are failing to take advantage of the numerous next-generation technologies that can help them to achieve and demonstrate compliance.
In the case of the SOX regulation, the main requirement is that an organization retains certain records for 5 years and ensures that they are not tampered with. Since this data collection and retention is often performed manually, organizations are missing the opportunity to decrease the overhead associated with maintaining compliance and are more likely to make reporting mistakes due to human error.
Benefits of Compliance Automation
The nearly half of organizations that are not taking advantage of opportunities to automate part or all of their SOX compliance activities are missing out on the wide range of benefits of automation. By moving work from manual processes to automated ones, an organization can decrease overhead and better manage their compliance.
- Increased Data Visibility
The SOX regulation requires an organization to have a high level of visibility into certain types of data in order to provide a certification that all of this data is correct. Manually trying to monitor and manage all of the potential stores of this data throughout the enterprise puts the organization’s compliance at risk since a simple oversight can result in important data being missed. With automated data collection and monitoring, an organization can be confident that they have full visibility into relevant sensitive data without requiring periodic searches through all of an organization’s network for hidden data repositories. This increased visibility is also valuable for ensuring that all sensitive or valuable data is properly secured.
- Lower Compliance Overhead and Costs
When organizations fail to embrace automation for regulatory compliance, this doesn’t remove their responsibility to maintain and demonstrate compliance. Instead, these organizations are forced to manually manage all compliance-related activities. For regulations in general and SOX in particular, compliance reports and the data that they require are fairly standardized. Paying employees to collect this data is much more expensive and time-consuming than automating data collection and just having a human check over the final numbers before sending off the report.
- Increased Productivity
The activities associated with regulatory compliance don’t earn the organization any money. The closest they come is to remove the need to pay fines for non-compliance. By freeing up human employees to perform core job roles, strategic automation of compliance activities can improve the productivity of the business and decreases the probability of human error in compliance reporting.
- Scalable Compliance
SOX is only one among many regulations that organizations must comply with. As the number of compliance regulations grows, attempting to manually maintain and demonstrate regulatory compliance quickly becomes unsustainable. Many of these new regulations are focused on sensitive data, either retaining it, as in the case of SOX, or protecting it, for GDPR and other data protection regulations. As a result, the same types of data are likely to be needed in multiple different compliance reports, and automating these data collection processes can allow an organization to maintain compliance with a growing number of new regulations and standards without needing significant growth in employee headcount.
Getting Started Automating Compliance
Almost half of the organizations are failing to take advantage of automation for SOX compliance. Like with many other regulations, SOX is focused on how an organization manages certain types of sensitive information. Compliance reporting requires an organization to gather a large amount of information about this data, and this process can be easily automated, providing a range of benefits to an organization.
One major way that an organization can lighten their compliance burden through automation is by adopting a solution that automatically identifies repositories of sensitive or protected data and provides centralized visibility, access monitoring, and vulnerability testing for them. With this type of solution in place, an organization can achieve the visibility needed for SOX compliance with much fewer manual processes, ensure that the data is properly protected, and lay the groundwork for compliance with other data protection regulations.