SOX Compliance in the Age of Cyber Threats

Achieving Sarbanes-Oxley (SOX) Act compliance is becoming more difficult. While the Act is primarily a financial reporting regulation, it requires all publicly traded companies operating in the United States to maintain the integrity, accuracy, and reliability of financial reporting, which those organizations can only achieve through robust cybersecurity measures. As such, an effective cybersecurity strategy is crucial for achieving SOX compliance.

However, SOX compliance is becoming increasingly complex. In 2023, research revealed that SOX compliance takes longer than it used to, and the average US organization spends $1 million yearly on SOX compliance.

The fact is that cybersecurity is growing more complicated, which means ensuring the integrity, and accuracy of financial reporting is getting harder. But there’s no reason to panic—there are steps you can take to ensure SOX compliance in the face of an increasingly complicated cybersecurity landscape.

The Problems

Evolving Threats

Arguably, the most significant factor contributing to difficulties in achieving SOX compliance is the rapidly evolving threat landscape. Attackers are constantly improving their attack techniques, meaning many more traditional tools and technologies struggle to detect them. As such, protecting financial data is becoming more complex, and attackers are more likely to gain unauthorized access to and compromise its accuracy and integrity.

Inadequate Threat Detection

Similarly, more advanced threats have rendered many detection and response capabilities inadequate, with threats avoiding detection and remaining in an organization’s network unnoticed. This delayed detection allows attacks to compromise financial data over an extended period before they are discovered. As SOX compliance requires prompt and accurate financial reporting, delayed threat detection and compromised financial data are significant issues.

Expanding Attack Surface

Expanding attack surfaces have also contributed to the increased difficulty in achieving SOX compliance. In recent years, most organizations have moved towards cloud-based systems and remote work models, dramatically increasing the number of potential attack points, unsecured devices, and poorly configured cloud services. Third-party relationships have significantly impacted organizational security: research from 2023 found that 98% of all organizations have at least one breach third-party in their supply chain.

Broader attack surfaces make it more difficult for organizations to secure all parts of their financial reporting processes. SOX requires that companies maintain adequate internal controls, but the increased complexity of IT environments makes this more challenging to achieve.

The Solutions

Advanced Threat Detection and Response

To improve threat detection and response while ensuring SOX compliance, organizations should look to AI-powered tools to detect unusual behavior or anomalies in financial systems. By detecting potential threats by their behavior rather than the malware’s signatures, security teams can respond to security incidents proactively before they cause any damage. Similarly, an automated incident response solution is worth considering to reduce incident response times.

Change Management

Change management also plays a critical role in ensuring SOX compliance by establishing structured processes for managing changes to financial systems and controls. It helps prevent unauthorized modifications, ensures proper documentation, and maintains data integrity.

Change management helps reduce the risk of errors and fraud by requiring formal approval, testing, and review of changes. This controlled approach also aids in maintaining accurate financial reporting and internal controls, as required by SOX Section 404. Ultimately, it helps organizations demonstrate compliance, mitigate risks, and ensure the reliability of their financial statements.

File Integrity Monitoring (FIM)

Similarly, File Integrity Monitoring (FIM) can help ensure SOX compliance by tracking and alerting security teams of changes to critical files. FIM systems can monitor files, servers, operating systems, networks, and endpoints for unauthorized modifications, deletions, or additions, helping detect potential security breaches or malicious activities.

By maintaining an audit trail of changes, FIM supports compliance with SOX Section 404, which requires robust internal controls over financial reporting. It ensures that only authorized personnel make changes, thereby safeguarding sensitive financial information. As such, FIM helps organizations maintain accurate records, detect anomalies early, and demonstrate compliance with regulatory standards.

Attack Surface Management

To manage the expanding attack surface and ensure SOX compliance, you should consider the following approaches:

• Implement a comprehensive risk assessment to identify vulnerabilities.
• Enforce strong access controls, including multi-factor authentication and least privilege principles, to protect critical systems.
• Maintain a robust patch management process to address vulnerabilities.
• Educate employees on security best practices to reduce insider threats.
• Use data encryption and maintain secure backups to safeguard financial data.

Conclusion

All in all, SOX compliance is getting more difficult but not impossible. Utilizing the right technologies can protect your organization’s financial data and demonstrate to SOX auditors that you take financial reporting seriously. To make your next SOX audit faster and more efficient, request a demo of Tripwire’s SOX compliance capabilities.