How Corporate Legal Team Uses Contract Lifecycle Management (CLM) for Sarbanes-Oxley Compliance?
Publicly traded companies in the U.S. must comply with the significant financial reporting and internal procedural requirements of the Sarbanes-Oxley Act (SOX or SOX Act). When you think about it, the essence of financial reporting is contracts — the records of a company’s transactions.
This makes contract management essential for SOX compliance. To help with the heavy lifting of SOX compliance, organizations now use contract lifecycle management (CLM) technology to systematize internal controls and reporting.
What Prompted the Sarbanes-Oxley Act?
In the early 2000s, under the weight of egregious corporate mismanagement and public accounting firms’ shortcomings, two massive U.S. companies — Enron and Worldcom — suddenly collapsed into bankruptcy. Other large-scale bankruptcies followed.
As Michael Oxley, a co-sponsor of the Sarbanes-Oxley Act in Congress, commented, the events were “… a severe shock to our system, to the core of the capital system that depends on honesty and integrity and on having investors believing in the companies they invest in.”
Congress Acts to Curb Corporate Fraud
In response to the fraud and financial reporting irregularities uncovered in the scandals, Congress passed the Sox Act in 2002. The law strengthened public company disclosure and auditing requirements to restore investor confidence.
Read full article at https://www.knovos.com/blog/how-corporate-legal-team-uses-contract-lifecycle-management-clm-for-sarbanes-oxley-compliance/
