Updated on January 9, 2024
Is your business proactively ensuring SOX compliance? This is essential to preserve your company’s ability to conduct operations, as it protects investors’ interests, your business, and your reputation.
In this blog, we describe in depth what SOX compliance requirements are, why they’re important, and whom they apply to. We also discuss how SOX regulations impact Salesforce CPQ.
SOX requirements refer to regulations imposed by the Sarbanes-Oxley Act of 2022. This is a federal law that requires public companies to maintain accurate financial records and internal controls. One of the key requirements of SOX is that companies must document all changes to their financial reporting systems. This documentation should include the following information:
The measures SOX requires function as mechanisms to prevent companies from using any ambiguities in the law to avoid accountability.
SOX compliance consists of four primary components. You have to:
Congress enacted SOX in response to financial scandals—including those surrounding Enron Corporation, Tyco International, and WorldCom—that shook investor confidence in the early 2000s and highlighted the need for stronger corporate governance. The act established stringent financial and reporting obligations for public companies in the United States.
The government passed this law with the objective to protect investors from corporate accounting fraud by improving financial reporting and auditing standards.
All publicly-traded companies and their wholly-owned subsidiaries are subject to SOX regulations. Publicly-traded foreign enterprises that conduct business in the U.S. must also be compliant, as must accounting companies that audit public companies.
If you’re a private company planning your initial public offering (IPO), you first have to be SOX compliant. And of course, even though SOX requirements don’t apply to all other types of organizations, you should never falsify or erase financial information.
Penalties for noncompliance include fines, debarment from stock exchanges, and invalidation of D&O insurance. CEOs and CFOs can face up to $5 million in fines and up to 20 years in jail for failure to comply.
On top of that, the punishment for retaliation against whistleblowers is up to 10 years imprisonment. And that’s not even taking into account the reputational consequences that damage client relationships and cause distrust.
SOX compliance isn’t just a sound business practice: It’s also a legal obligation for public companies. A fundamental aspect of compliance requires you to uphold ethics and control access to financial data. Moreover, when you ensure compliance, you enjoy the added advantage of protection against insider threats, cyber attacks, and breaches.
Remember, if you’re planning to take your company public, you’re required to comply with SOX before this can even happen.
Even private companies that aren’t planning on going public yet benefit from adhering to SOX regulations. Certain provisions of SOX are still applicable to them too, such as penalty and liability provisions.
As previously mentioned, following SOX requirements is simply the smart thing to do from a business perspective. All publicly-traded companies benefit from compliance by communicating a baseline level of financial assurance, thus promoting investor confidence, stakeholder trust, and market certainty.
Not all SOX requirements pertain to the CPQ development process—only those aspects that involve financially impactful data, metadata, or configuration data. When dealing with these types of data, the development process must be SOX compliant.
Unauthorized changes and access to data can lead to data security issues and financial inaccuracies. Even a single incident can put your whole company at risk. News archives are full of reports of companies that unfortunately experienced data breaches or fraud. These events cost them millions in dollars in damages—as well as a loss of public trust.
SOX regulations for Salesforce CPQ development may seem complex and time-consuming. Nonetheless, they’re put in place to prevent anything like this from happening to you and your company.
Of course, it’s not sufficient to be SOX compliant. You also have to prove to auditors you adhere to regulations. That’s where Prodly Compliance Center comes in.
Compliance Center automates the monitoring, documentation, and audit report generation requirements of SOX in CPQ. It provides 24/7 org monitoring that you can configure according to the needs of your business. In addition, it tracks the details of every change by linking deployments to work items in your work management application. Last, but certainly not least, it lets you generate audit reports—both population and sample reports—with a single click, after which all you have to do is download them… and you can send them to the auditor. Stress? Eliminated.
SOX requirements for the Salesforce CPQ release management process include:
SOX compliance can be complex if it applies to your company—but it’s critical, nonetheless. Yet if you adhere to best practices for SOX compliance in Salesforce CPQ development and leverage robust automation like Compliance Center, compliance becomes effortless.
What are the requirements of Section 404 of SOX?
Section 404 of SOX requires publicly-traded companies to report annually on the efficacy of their internal controls. Learn more.
How can I be SOX compliant in the Salesforce release process?
The best way to be SOX compliant is by following the SOX compliance checklist, which supports the critical requirements of SOX—enforcing internal controls and ensuring data integrity. Learn more.
How can I overcome SOX compliance challenges in the Salesforce release process?
You can successfully overcome SOX compliance challenges by implementing best practices for SOX compliance in the Salesforce release process. Learn more.
The gold standard for documenting SOX in Salesforce CPQ!
