Although Theranos was once valued at $9 billion, it has fallen too far from its glory. Investors were drawn to the promise of a technology that would revolutionize the medical industry, but the CEO of the company was creating fraud schemes behind closed doors. Once she was discovered, the business slowly crumbled, investors left, and employees had to find new employment.
In today’s imperfect world, fraud cases can easily hurt your business without your knowledge, and all that’s needed is a single rogue person in the workforce. In the snap of a finger, your source of livelihood could turn into another ‘Theranos tale.’ Lucky for you, if you comply with the SOX guidelines, you can easily limit the chances of this happening to your business and using SOX compliance software is wise.
Here is more about using SOX compliance software and how it will benefit your business:
» The Value of Financial Statement to Key Stakeholders
Investment is a betting experience in which investors trust their instincts that a company will rise to its full potential. While some business will fail, others will grow to their potential. However, the one single information that can help investors decide to stay put, leave, or avoid investing in your financial statement.
Through studying the patterns in your financial documents, investors can at least have a pillow to lie on when making their decisions. Investors aside, employees and customers can also use this information to decide on whether they can rely on your business for the long-term. Unfortunately, fraud cases such as Theranos, WorldCom, and Enron do shake investors trust.
For businesses that follow the SOX requirements, however, the repercussions of fraud might be too dire for CEOs to allow it to happen. This gives most investors and stakeholders a preference for doing business with those public and private organizations that are SOX compliant.
» The Software Makes the Achievement of the Three SOX Rules Easy
Ideally, IT departments need to be in control of the financial data presented to investors. Your staff needs to comply with the SOX policies, despite trying to do so in a cost-effective manner. It all trickles down to three rules.
The first rule outlines the destruction, falsification, and alteration of the stored records and the fines that will result from it. The second rule describes the best practices for storing the records and the required retention periods. The third rule outlines the specific business records that should be saved to remain compliant, which include communication, electronic communication, and business records. Ideally, the software provides a central location for exercising control over these records.
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» It Streamlines the Role of Executives in SOX Compliance
Under the SOX requirements, CFOs and CEOs need to forward a statement along with their businesses’ periodic reports. The statement is meant to certify that the regular report you produce and the complementary financial statements comply with the SOX requirements. On the other hand, the statement should also verify that the information represented in the reports is somewhat in line with the financial situation of your business.
In case the CEO or CFO knowingly or willingly falsifies the statement, they can be fined between $1-5 million and/or jail time of 10-20 years. The trick of this rule is how these executives can ensure that the information in the financial report is correct.
Conventionally, they might have to go through every nitty-gritty detail of the financial situation before forwarding their statements. With SOX software, they can have a central location for analyzing the financial data presented to them. This eliminates the chances for errors while streamlining the compliance of your business.
» It Makes Audits Easier
In case an auditor notices any deficiencies in your compliance efforts, you risk hefty fines. However, auditors can stall your business operations when auditing your business, which can lead to losses. This will also apply to third-party auditors.
The software creates a clear evidence trail of your compliance efforts. As a result, your auditors will only need to disrupt your daily operations for a moment as they assess all the information they require.
» Features of SOX Compliance Software
Ideally, great software needs to improve your compliance automation. This includes offering reminders, streamlining record keeping, and even indexing financial records. On the other hand, it should have a dashboard that makes it easy to access every aspect of your compliance.
It should also be secure enough to protect both your business secrets and client information. Lastly, it should be user-friendly and have an interactive UI.
» Why Every Business Needs One
Without SOX compliance, a lot can go wrong for your business. For instance, insurance companies will see you as a risky business, and you will have to pay high insurance premiums. On the other hand, it might be tougher to get investors, as most will find it hard to trust your organization.
Worst of all, you risk hefty fines from the regulatory bodies. Also, the fact that you will have an easily accessible trail will make financial reporting easy, not to mention streamlining audits.
All your stakeholders hold you in high regards, but one simple mistake or fraud case can change this. SOX software is a tool that will help you stop such a risk in its tracks. Invest in the software today to make your SOX compliance efforts more visible and achievable.