The Sarbanes-Oxley Act (SOX)
The 2002 Sarbanes-Oxley Act (also known as the SOX Act) was enacted on the heels of major accounting scandals. In order to prevent widespread fraud, the SOX Act contains comprehensive and strict guidelines for regulating companies’ financial reporting.
The SOX Act applies to all publicly traded companies, wholly-owned subsidiaries, foreign companies that do business in the United States, and some private companies. All of these entities must adhere to certain rules regarding auditing, accounting, and financial reporting in order to say compliant.
The Act’s most important sections are 302, 401, 404, 409, 906, and 802. Notably, section 802 requires all business records, including electronic files, to be saved for five years or longer. Section 404 addresses internal controls, requiring a company’s executives to certify the accuracy of all financial statements and disclose any material changes, shortcomings, or irregularities. In order to stay compliant, all businesses should implement technology that integrates and automates their files to improve accuracy and reduce the risk of human error.
Why Contract Management Matters for SOX Compliance
Keeping your business SOX compliant can be stressful and expensive, but contract management software that is reliable, transparent, and organized makes achieving compliance much easier. Because keeping thorough and reliable records is essential to SOX compliance, the right contract management software will adequately store, organize, and protect your company’s files.
Contract management software can track changes and provide a full history of all documents. This allows your business to maintain accurate and complete contracts in the case of a company audit.
Contract management software can ensure a company does not miss any important steps in approving, authorizing, reviewing, verifying or otherwise engaging with its contracts. Missing or forgetting certain steps can jeopardize a company’s SOX compliance.
The right contract software management utilizes automated alerts to ensure that users never miss important information or bypass a step in a contract lifecycle. Such automation takes the pressure off businesses to manually check and keep track of the many steps involved in effectively managing contracts and other important information.
SOX Compliance Requirements
A SOX compliant contract management system must be secure. Your company’s data is important to you, but it also needs to be protected in order to ensure SOX compliance. As such, a contract management system should be end-to-end encrypted and only permit select people to access, edit, or delete documents. Software that prevents the unauthorized access or destruction of data can help your business easily keep track of its documents, maintain transparency, and be SOX compliant.
Businesses that comply with SOX must have strong internal controls that ensure data is protected. Company information must be accurate and current for the SOX auditor in the case of a compliance audit. Despite high implementation costs that can be burdensome for many young companies, businesses must prioritize SOX compliance. Violating the Act can mean expensive fines, imprisonment, or both.
How Evisort Helps Businesses Stay Compliant
Evisort’s user friendly artificial intelligence powered contract lifecycle management software includes all the necessary features to keep your company compliant. Our built-in audit trail keeps track of all contract data including contract renewal information and any changes made to documents in the system.
The system is automated, meaning you do not have to worry about manually keeping track of changes to files. Automated alerts and notifications keep you and your business on track, ensuring that you never miss important information or steps in your contract analysis. Using Evisort’s OCR software, any document even scanned PDFs, can be integrated into the automated system. The OCR software allows your company to keep all of its documents and contracts in one secure system.
Evisort uses the latest data security software to keep your important information safe. With customizable permissions, only certain users can access, edit, or approve documents. Your company’s data is always protected by end-to-end encryption, whether the data is in transit or at rest.
These specific features address common problems in SOX compliance. Maintaining proper security measures and keeping a detailed audit trail will keep your business complaint in case of an audit. Evisort’s streamlined, intuitive, and smart contract management software makes doing business easier and more organized.
Automating the contract management process allows your legal team to track to simultaneously track an infinite number of contracts in a digital contract repository without the need for filing cabinets and additional hardware.
If you are looking for a contract management tool to automate the contracting process and not only streamline your document management process but your entire business, then contact Evisort to organize a demo.