Publicly traded companies have no choice but to comply with the Sarbanes-Oxley Act (SOX), but it could be argued that, whether public or private, compliance with the act can mean the difference between having a sustainable business or not. Having proper internal controls, as required by Section 404 for publicly traded companies, are essential to any business looking to operate at its highest potential. SOX and related standards provide those private companies, regardless of size, the blueprints on how to establish effective controls. In small businesses, the most expensive cost of establishing, monitoring, and assessing these controls is time. The time needed and spent on recognizing risks and establishing effective controls to mitigate them. This usually means key staff or owners in the smaller companies will have to wear multiple hats, not only taking time away from making business decisions but also in turn requiring risk assessments and controls for themselves. This is where establishing those controls as soon as possible becomes crucial. Controls do not always have to mean additional software or IT protections, these could be adding a staff person separate to the accounting process to serve as check and balance to those directly in the accounting process. Establishing controls like these, as well as IT controls like access restrictions and user logs, are easily and inexpensively established and maintained relative to the company’s earning potential for having a more secure and defined company structure. This established platform can leverage smaller companies with enormous growth potential due to increased business decision-making time as a result of established controls and mitigation practices. Less time spent on assessing risks or responding to breaches of data, trust, or access means more effective management and business decisions.
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