In 2004, the Securities and Exchange Commission implemented the Section 404 of the Sarbanes Oxley Act (SOX). Because of this, public and private accounting firms need to comply with the Section 404, i.e. accounting firms need to document, test, report and evaluate their controls over financial reporting.
The process made things complicated for numerous accounting firms, especially the ones with an IT infrastructure. Many companies lost their licenses because they couldn’t comply with the process. Although there is no rocket science involved in it, many of the companies felt perplexed while adhering to the act.
Here are some professional tips on how to comply with the Section 404 of SOX easily:
The first step towards complying with the legislation is to make sure that the employees of your company are well aware of what it has. You can arrange conferences and seminars in which you can train your employees and educate them about the legislation.
Make Your Own Plan:
Since the act was implied, many companies started sharing their plans with other companies which finally created a tragic situation – many of them got their license canceled. The tip here is to always create your own SOX 404 plan and program according to your specific business requirements.
Hire an Advisor:
Possibly the best thing to do in order to comply with a much complicated legislation like the 404 is to hire an advisor. The advisor will perform monthly visits to enlighten your employees, directors and other major team players about the process. He or she can also spot out the weak areas of your company and can suggest tips on how to improve them.
Keep Room for Flexibility:
The laws can be changed any day, so you need to make sure that you have enough flexibility in your 404 SOX program to meet any changes that come up.