For some time now, the importance of SOX compliance has been evident in the United States and Japan – but UK SOX is just around the corner.
While it may not be on your business’s radar yet, murmurs are quickly turning into full-blown conversation this side of the Atlantic.
The provisional introduction of UK SOX in 2024 represents a great opportunity for firms both small and large to take a look inwards: do your internal processes hold up? Is audit compliance top of the agenda, or simply an afterthought? Could automation streamline your workflow?
We’re here to run you through the fundamentals of SOX compliance, including the benefits of automation in getting you ready for when those audits roll around.
Hang On – What is SOX Compliance?
We’re glad you asked.
SOX, more properly known as Sarbanes-Oxley, is an act passed by the US Congress in 2002.
Arriving at a time of large-scale financial misconduct, the law intended to improve regulatory compliance across the board by ensuring that businesses take more responsibility over their monetary records.
Put simply, it’s about protecting stakeholders and giving investor reassurance. Senior figures from across the business – no matter the industry – can rest easy knowing that their money is being handled correctly, and they won’t end up in any trouble.
That being said, the crux of SOX boils down to more of the nitty-gritty. In order to pass the annual audit or become compliant in the first place, your financial processes need to be in good shape.
That means manual processes – be it payments, bank feed retrieval, or the general sticky tape and plasters approach with spreadsheets – are a no-go.
In fact, Protiviti and Auditboard’s 12th annual SOX Compliance Survey found that the Covid-19 pandemic “accelerated the continued need to deploy technology and automation within compliance processes”.
This kind of internal reform might strike you as a headache in waiting, but that doesn’t have to be the case. Conversations around regulations and audits are never fun, but SOX compliance is best viewed as a catalyst; an opportunity to streamline your workflow and open the door to modernisation.
It’s kind of like a badge of honour: our internal processes get a big green tick.
Sounds nice when you put it like that, right?
So Who Will UK SOX Affect?
As it stands, SOX is primarily of concern to businesses in the United States who are looking to float on the stock exchange.
However, this isn’t the only situation in which a business might like to become SOX compliant. Especially as it heads to the UK, it might be of interest to the following:
- Businesses planning to go public in the near future
- Firms that are facing any kind of internal pressure from either stakeholders or external auditors
- Teams who are reliant upon manual processes, such as in their banking operations, and are eager to modernise
- Any business who wants peace of mind when it comes to regulation and compliance
SOX Compliance for UK Businesses
It’s easy to see why firms across the UK aren’t yet concerned about Sarbanes-Oxley. It’s a reasonably long way away from hitting our shores and sounds more like a 19th century Prime Minister than a piece of crucial regulation.
If anything has been made apparent in the past few years, however, it’s the importance of preparation. The economic landscape is turbulent and unpredictable, meaning that your company’s financial processes being at the top of their game is a must.
So is UK SOX definitely coming? The short answer is yes.
In March 2021, the Department for Business and Industrial Strategy published its proposals for a UK variation, giving it legal footing.
If your business is looking to float either on the primary London Stock Exchange or the AIM sub-market, 2022 will prove to be a turning point in terms of preparation.
The UK will likely benefit from the same advantages seen in the US. In their article The Unexpected Benefits of Sarbanes-Oxley for Harvard Business Review, Dittmar and Wagner noted that the wider business landscape saw tangible improvements from “[a] strengthened control environment; more reliable documentation; increased audit committee involvement; [and] better, less burdensome compliance with other statutory regimes”.
It’s not just about the wider picture, though – there are crucial takeaways for your teams on a more intimate level.
Dittmar and Wagner conclude that because of “more standardised processes for IT and other functions; reduced complexity of organisational processes; better internal controls within partner companies; and more effective use of both automated and manual controls”, businesses should “start viewing Sarbanes-Oxley as an ally”.
The Importance of Automation
We’ve mentioned it already, but automating your business’s processes can be a huge step in the right direction when it comes to SOX compliance.
Often, automation is simply associated with ease – but it’s so much more than that.
When it comes to your banking operations, automation is invaluable across the board: improving cybersecurity; reducing human error and risk; streamlining your payments so you can finally wave goodbye to those pesky spreadsheets.
Automation is about filling the leaks in your processes. It’s a no-brainer when it comes to SOX compliance.
Here at AccessPay, we can’t promise to help with all of it – but we can fast-track your journey to SOX with automation, making for an easier couple of years.
Aspects of your banking operations that you’ve learned to live with are often points of contention for audits: downloading payment files from your back-office system, retrieving banking statement feeds, and a broader lack of visibility over your cash position. With the right solution, forward-thinking businesses can embrace the cloud and begin to view SOX as an opportunity rather than challenge.
If you’d like to learn more, or for your journey towards SOX compliance to be pain-free – no matter whether you’re based in the UK or US – fill in the form below and we’ll help out.