For entrepreneurs and business owners, the preferred area of focus is on growing an organization and making money.
Regulatory and compliance issues tend to be the last thing most entrepreneurs want to deal with, but there can be real, measurable business benefits for compliant organizations.
One of the most extensive pieces of regulatory legislation was The Sarbanes-Oxley Act of 2002, which was designed to provide oversight of the accounting industry.
This sweeping legislation also provided protection for whistleblowers and put CEOs in the position of responsibility for errors in accounting audits.
It can be tough as a business owner or leader to see the benefits of Sarbanes-Oxley, but there are some.
The following highlights some of the business benefits of SOX compliance.
Exposure of Weaknesses
What SOX ultimately did that benefitted businesses in perhaps the most profound way was that it provided a framework for them to discover areas of weakness that could be turned into strengths.
When there’s more oversight in an organization, then it gives more opportunities to see where inefficiencies exist, and without being able to spot those weaknesses and inefficiencies, there would be no way to eliminate them.
With SOX compliance it’s easier to see where there are unnecessary processes and redundancies, as well as inconsistencies, all of which are cumbersome to the productivity and growth of a business.
With SOX compliance there are also more opportunities to use accurate financial reporting as a way to drive data-based business decisions.
Having strong oversight because of the need to be SOX compliance is beneficial in terms of risk management.
When businesses are responsible for being SOX compliant, they are also managing and mitigating potential risks.
SOX compliance can expose potential errors and fraud that could have cost a lot of money before they become significant problems.
Better Internal Controls
Having some strong internal controls in place is essential. It allows for the streamlining of processes and evaluation. This can have a direct impact on profitability.
The better the internal controls a business has in place, the better equipped they are to grow in a sustainable way.
Without standardized, effective and efficient control frameworks, businesses tend to grow in a way that feels out of control and unsustainable. This is a big reason that even great companies may not survive.
To remain SOX compliant most businesses also rely on automated solutions, and automation in these areas has benefits throughout every area of an organization.
Finally, SOX compliance can also help employees feel like there’s more transparency and they’re likely to feel more comfortable in an organization that places a premium on compliance.
Employees want to feel like they’re working for an ethical organization. They also want to feel like they’re safe if they do say something about something they see fraudulent.
These are things that inherently arise from being SOX compliant within a business.
Even for reluctant entrepreneurs, thanks to technology and software solutions compliance is simpler than at any point before, and with that compliance, there are business benefits.