SOX
U.S. federal act mandating financial reporting controls and accountability
FedRAMP
U.S. program standardizing federal cloud security authorization
Quick Verdict
SOX mandates financial reporting controls for public companies to prevent fraud, with CEO/CFO criminal liability. FedRAMP authorizes secure cloud services for federal agencies via NIST controls and continuous monitoring. Public firms adopt SOX for SEC compliance; cloud vendors pursue FedRAMP for government contracts.
SOX
Sarbanes-Oxley Act of 2002
FedRAMP
Federal Risk and Authorization Management Program
Key Features
- Assess once, use many times across agencies
- NIST 800-53 Rev 5 controls by impact levels
- Independent 3PAO security assessments required
- Continuous monitoring with quarterly deliverables
- FedRAMP Marketplace for authorized CSPs
Detailed Analysis
A comprehensive look at the specific requirements, scope, and impact of each standard.
SOX Details
What It Is
Sarbanes-Oxley Act of 2002 (SOX) is a U.S. federal statute establishing corporate accountability standards. It mandates internal controls over financial reporting (ICFR), executive certifications, and audit oversight to protect investors post-scandals like Enron. SOX employs a risk-based, top-down approach using frameworks like COSO.
Key Components
- **Three pillarsPCAOB oversight (Title I), auditor independence (Title II), executive/board 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.
- Compliance via annual management reports and PCAOB auditor attestations.
Why Organizations Use It
Public companies comply legally to avoid penalties; enhances investor trust, reduces fraud risk, improves governance. Strategic benefits: operational efficiency, M&A readiness, lower capital costs.
Implementation Overview
Phased: scoping, documentation, testing, remediation using GRC tools. Applies to U.S.-listed firms; exemptions for smaller/EGCs. Requires annual audits, continuous monitoring. (178 words)
FedRAMP Details
What It Is
FedRAMP (Federal Risk and Authorization Management Program) is a U.S. government-wide framework standardizing security assessment, authorization, and continuous monitoring for cloud services used by federal agencies. Its primary purpose is enabling "assess once, use many times" to reduce duplication, based on risk-based NIST SP 800-53 controls aligned with FIPS 199 impact levels.
Key Components
- NIST SP 800-53 Rev 5 controls: ~156 (Low), ~323 (Moderate), ~410 (High), plus LI-SaaS baseline.
- Core artifacts: System Security Plan (SSP), Security Assessment Report (SAR), POA&M.
- 3PAO independent assessments; continuous monitoring playbook.
- Compliance via Agency or Program Authorization paths.
Why Organizations Use It
- Unlocks federal contracts (e.g., $20M+ opportunities).
- Meets CMMC mandates; demonstrates mature security.
- Builds stakeholder trust; competitive edge in commercial sales.
- Risk reduction through standardized baselines.
Implementation Overview
- Phased: preparation, assessment, authorization, monitoring (12-18 months typical).
- Involves SSP drafting, 3PAO audits, remediation.
- Targets cloud providers (CSPs) seeking U.S. federal business; high resource needs.
Key Differences
| Aspect | SOX | FedRAMP |
|---|---|---|
| Scope | Financial reporting internal controls (ICFR) | Cloud service security assessment/monitoring |
| Industry | Public companies (U.S. securities filers) | Cloud providers serving U.S. federal agencies |
| Nature | Mandatory federal statute with criminal penalties | Standardized government authorization program |
| Testing | Annual ICFR testing/auditor attestation (PCAOB) | 3PAO assessments + continuous monitoring |
| Penalties | Criminal fines/imprisonment for executives | Loss of authorization/marketplace delisting |
Scope
Industry
Nature
Testing
Penalties
Frequently Asked Questions
Common questions about SOX and FedRAMP
SOX FAQ
FedRAMP FAQ
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