16 Mar Puerto Rico Businesses and SOX | A Beneficial Alliance
The Sarbanes-Oxley Act of 2002 (SOX) has ushered in the most wide-ranging changes in the accounting profession since the Securities Acts of 1933 and 1934. Despite the legislation being geared toward publicly held companies, the goal of this act is meant to protect investors from fraudulent accounting activities by corporations. This protection, however, is beneficial to all businesses in Puerto Rico including private companies, nonprofits, and other non-SEC registrants.
We interviewed some of our resident SOX experts to get their insight into SOX compliance in the local landscape. Harry Santiago, CPA and Consulting Director at FPV & Galíndez, notes how SOX has affected the island: “The main impact in Puerto Rico is that SOX requires a control and risk culture embedded in a Company, which is an area where many Companies lack throughout Puerto Rico. Engagement after engagement, we noticed clients lacking key and essential controls to prevent fraud and properly safeguard assets.” Among some of the challenges implementing compliance, he mentions that “implementing SOX requires a full enterprise-wide commitment and change in way business is ran”, so the “Culture and tone” has to come from the top.
“Engagement after engagement, we noticed clients lacking key and essential controls to prevent fraud and properly safeguard assets.”
Businesses have greatly benefited from becoming SOX-minded. Another firm SOX expert, Amir Y. Lopez Ortiz, commented on his opinion of one key benefit he has witnessed: “one of the SOX Compliance requirements is the implementation of an Internal Control System that must be monitored and evaluated consistently. This evaluation performed over the implemented controls assists in the identification and analysis of existing and emerging risks that could directly affect the company’s operation and financial results.” Santiago concludes: “Although SOX is required only to Public Companies, and in Puerto Rico we have just a handful, its implementation as part of a business culture could prevent fraud, minimize risk and prepare Companies for future expansions.”
It is a matter of good business strategy locally to embrace SOX principles to strengthen a company’s internal control environment. When companies and organizations have a strong system of internal controls, they often prove to be successful in their respective marketplaces and industries. Strong internal controls push a company beyond its current limits by helping it implement best practices, retain valuable resources, and serve its customers better than its competitors. With this in mind, business owners in Puerto Rico can certainly see how SOX can prove to be a long-standing ally.
For SOX compliance to be beneficial, you need the right team to work with you. FPV & Galíndez understands your organization’s needs and has the track record of excellence to support that. Learn more about how we can achieve SOX compliance for your organization.