SOX Audit: need, when and how? Each entity to Answer themselves

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The Sarbanes Oxley Act 2002 (Sox) was passed by US congress to protect the public, investors, and other parties involved from fraudulent activities by cooperation’s or business entities.

Sox Audit Need and who must comply:

The SOX audit requirements for all US public companies, board, investors is to increase the transparency and check the internal controls and reporting process of the entity.

The management is responsible for accuracy of the financial statement, internal controls, corporate disclosures.

Which type of entities need SOX audit

  • Public traded companies.
  • Wholly owned subsidiary and foreign companies.
  • Private companies preparing for initial public offering
  • Audit Firms which do public companies audit.

Sox Audit Involves the review of internal controls and procedures. Auditor will follow the guidelines set up by organizations for its internal controls. They will analysis the logging systems, checking these systems and processes and controls of the organization on sensitive data.

When should a company perform SOX audit

Companies which are dealing with public at large may require Sox audit.  Like large listed organization, companies having debt obligations, companies which want to go public or want to raise the fund from private equity.

Some business partners might require private companies to undergo Sox audit. Some lenders may require companies to do Sox audit. Many lenders may require independent certification or report about the financial statement and controls of the company.

External Shareholders may require Sox audit before investing in the companies to check the financial stability, mitigate risk, assurance about the controls.

Parameters to do Sox audit


Risk Assessment

Materiality Analysis



Key controls assessment

How to prepare for Sox Compliance Audit

To prepare for Sox Compliance audit the entity should have

  1. Robust Permissive Access Model
  2. Cybersecurity Framework
  3. Data back up
  4. Data Security
  5. Fraud Control Mechanism

The auditor should be able to check all the parameters and can report any deficiencies in system.

Want to know more about Sox Compliance Audit and planning to hire Offshore Audit Support Staff. Connect with our team call us on +1 929 254 6300 or email us on

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