Efficient SOX 404 Compliance Requires Meticulous, Comprehensive Policy Framework (part 1) By Peter Culpepper

About Peter Culpepper: The Chief Financial Officer of Tennessee-based Provectus Pharmaceuticals, Pete Culpepper oversees all of the company’s SOX Section 404 activities. Bringing nearly 20 years of experience to his role at Provectus, Culpepper proves skilled in such undertakings as capital fundraising, management, investor relations, and business planning.

Section 404 of the Sarbanes-Oxley Act (or SOX for short), a federal law enacted in 2002 in reaction to several national accounting scandals, requires all publicly-traded companies to implement internal controls and policies for financial reporting. The rule also mandates that such organizations document and test these procedures and checks to ensure that they provide effective transparency and oversight of fiduciary activity. For most companies, compliance mandates absorb considerable time and energy in such areas as information technology, finance and accounting, and law.

As such, many organizations dedicate significant resources to confirm that they meet the terms of SOX Section 404. In addition to evaluation and refinement of their internal procedures, SOX Section 404 mandates that companies employ the services of independent accountants to verify the soundness of their financial controls. The wide-ranging demands of the rule often necessitate new investments in technology as well as new hires to administer the various components of their financial reporting policies.

Companies which hire external organizations for managed services in information technology (IT) need to keep in mind that these parties must adhere to SOX Section 404 IT standards. An integrated audit reviews IT controls as they relate to financial reporting procedures. This means that in retaining a managed services provider, compliance officers should ascertain whether its engineers and technicians understand SOX mandates and can deliver documentation and endure testing according to regulatory demands.

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