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SOX Overview: The starting point for SOX implementation

In the first episode as well as this overview, Janet Winkler, CEO of FAE Consulting GmbH, and Judith Geiß, owner of the Bridge ∙ Consulting & Training e.K., will talk about SOX and give us some valuable insights into their experience with this American act in Judith Geiß’s podcast “Übernahme als Chance” – “Takeover as a chance”. The first episode covers an explanation of how the Sarbanes-Oxley Act came into practice, the starting point and our Podcast insights for its implementation.

How SOX came into practice

SOX (Sarbanes-Oxley Act) is an U.S. American federal law enacted in 2002. At that time, it set new broader requirements for public companies in the U.S.A. and their subsidiaries to implement different controls and defined the responsibilities of the management and penalties for misconduct. The act emerged as a direct response to corporate scandals such as WorldCom and Enron, which led investors to lose billions.

According to the Sarbanes-Oxley Act, the management of a company must individually certify the accuracy of the financial information and faces penalties in case of fraud.

Goals of the SOX act:

  • Restore the confidence of the investors after the corporate scandals
  • Set new rules of disclosure and corporate governance
  • Increase the reliability of public companies’ financial reporting

Currently, with the Wirecard accounting scandal in Germany, we see again a similar case to the ones that happened at the beginning of the 21st century in the U.S.A. A large amount of investors’ money is evaporated by financial maloperations.

The starting point for SOX implementation

If you would like to implement SOX internally for your organization, we have illustrated the starting point for its implementation: The four pillars shown in the graphic below. All steps taken to identify and transform existing rules, responsibilities, and institutions as well as to document the new set of rules and activities run along the lines of the four pillars.

SOX implementation

Source: The Bridge ∙ Consulting & Training e.K. 

Do controls prevent manipulation?

The answer to this question is that SOX cannot prevent all fraudulent financial activities, especially if the fraud is committed consciously, but it makes it less likely due to regular reporting and controls such as 4-eyes-principle.

Is there a right and a wrong way to implement SOX?

When implementing SOX, it is particularly important to do it right. If done right, it not only reduces the risk of manipulations, but also opens opportunities to optimize internal processes. SOX implementation and documentation should not turn into the primary activity of a company. Every company should find the right people and tools to comply with the SOX requirements without increasing the workload for employees over an acceptable threshold.

Our Podcast insights for SOX implementation

For more insights, listen to the podcast or check out the video training of the Bridge (both in German). If you have to implement SOX or you have encountered some challenges of implementing SOX,  feel free to contact FAE Consulting GmbH at contact@fae-consulting.de or The Bridge ∙ Consulting & Training e.K.

FAE Consulting GmbH is specialized in optimization of business processes and offers advisory services on financial structuring, cost efficiency, and compliance. The Bridge ∙ Consulting & Training e.K. offers specialized consultancy services for companies which were acquired by an American group or integrated in an existing company structure as well as mentoring and training for the employees and management of these companies.

Both companies cooperate in assisting you with the SOX implementation and with the optimization of your processes. Contact us for a strategy meeting at contact@fae-consulting.de.


the Bridge ⋅ Consulting & Training e.K.: SOX-Compliance: Warum Sie das jetzt brauchen – und es sogar gut für Sie ist
Haufe-Lexware GmbH & Co. KG: SOX Compliance: Das sind die Anforderungen
Wikimedia Foundation Inc.: Sarbanes-Oxley Act

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