What It Is

Sarbanes-Oxley Act of 2002 (SOX) is a U.S. federal regulation enacted post-Enron scandals. It mandates corporate accountability through internal controls over financial reporting (ICFR) and executive certifications. SOX employs a risk-based approach via COSO framework for control design, testing, and reporting.

Key Components

• **Three pillarsPCAOB oversight (Title I), auditor independence (Title II), executive accountability (Titles III-XI).
• Core sections: 302/906 (certifications), 404 (ICFR assessment/attestation), 409 (real-time disclosures).
• Built on COSO principles; no fixed control count, focuses on key controls like ITGC, segregation of duties.
• Compliance model: annual management report, auditor attestation for most filers.

Why Organizations Use It

Public companies comply to avoid penalties, build investor trust, reduce restatements. Benefits include operational efficiency, fraud deterrence, M&A readiness. Enhances governance, lowers cost of capital.

Implementation Overview

Top-down risk scoping, documentation, testing, remediation cycles. Applies to U.S. public issuers; exemptions for smaller filers. Requires annual audits, continuous monitoring; phased rollout spans 18-24 months initially.

What It Is

Regulation (EU) 2024/1689, the EU AI Act, is a comprehensive regulation establishing the first horizontal framework for AI governance. Its primary purpose is to ensure AI systems are safe, transparent, and respect fundamental rights across sectors. It employs a **risk-based approachprohibiting unacceptable risks, regulating high-risk systems, imposing transparency on limited-risk, and minimal oversight on others.

Key Components

• **Four risk tiersprohibited practices, high-risk obligations (e.g., risk management, data governance, cybersecurity per Articles 9-15), GPAI model rules (Chapter V), transparency duties.
• Over 100 requirements across lifecycle, with conformity assessments, CE marking, EU database registration.
• Built on safety, transparency, fairness, accountability; presumption of conformity via harmonized standards.

Why Organizations Use It

• Mandatory compliance for EU market access, avoiding fines up to 7% global turnover.
• Enhances risk management, builds trust, enables competitive differentiation in regulated sectors like healthcare, finance.

Implementation Overview

• Phased rollout (6-36 months); starts with AI inventory, classification, builds QMS, documentation, monitoring.
• Applies to providers/deployers EU-wide; involves audits, notified bodies for high-risk.