SOX
U.S. law for corporate financial reporting and internal controls
ISO 14064
International standard for GHG quantification, reporting, verification
Quick Verdict
SOX mandates financial control audits for US public firms to prevent fraud, with severe penalties. ISO 14064 voluntarily guides global GHG inventories for credibility. Companies adopt SOX for legal compliance; ISO 14064 for stakeholder trust and decarbonization strategy.
SOX
Sarbanes-Oxley Act of 2002
Key Features
- Mandates Section 404 ICFR management assessment and auditor attestation
- Requires CEO/CFO personal certifications under Sections 302/906
- Establishes PCAOB for public company audit oversight and standards
- Enforces strict auditor independence and rotation requirements
- Imposes criminal penalties for false certifications and document tampering
ISO 14064
ISO 14064: Greenhouse gases
Key Features
- Three-part framework for GHG inventories, projects, verification
- Five principles: relevance, completeness, consistency, transparency, accuracy
- Organizational and operational boundary definitions with Scopes 1-3
- Baseline scenarios and additionality for project reductions
- Risk-based validation/verification with reasonable/limited assurance
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 regulation enacted post-Enron scandals to enhance corporate accountability. It mandates internal control over financial reporting (ICFR) via a risk-based approach using frameworks like COSO, focusing on public companies and auditors.
Key Components
- **Three pillarsPCAOB oversight (Title I), auditor independence (Title II), executive certifications and disclosures (Titles III-IV).
- Core sections: §302/906 (certifications), §404 (ICFR assessment/attestation), §409 (real-time disclosures).
- Built on PCAOB standards; no fixed controls but entity/process/ITGC emphasis; annual management report plus auditor opinion for most filers.
Why Organizations Use It
- Legal mandate for U.S. public issuers; reduces fraud risk, builds investor trust.
- Strategic benefits: operational efficiency, M&A readiness, lower capital costs.
- Enhances governance, deters misconduct via criminal penalties.
Implementation Overview
- **Phased, top-down risk-basedscoping, documentation, testing, remediation, monitoring.
- Applies to public companies (exemptions for small/EGCs); involves finance/IT/legal.
- Requires annual §404 assessments/audits; ongoing via automation/CCM. (178 words)
ISO 14064 Details
What It Is
ISO 14064 (ISO 14064-1:2018, -2:2019, -3:2019) is an international standard family for greenhouse gas (GHG) quantification, reporting, and verification. It provides a modular framework for organizations to develop credible GHG inventories (Part 1), quantify project reductions/removals (Part 2), and assure statements (Part 3) using a principle-based approach emphasizing boundaries, data quality, and auditability.
Key Components
- **Three interdependent partsorganizational inventories, project accounting, validation/verification.
- **Five core principlesrelevance, completeness, consistency, transparency, accuracy.
- Scopes 1-3 classification for emissions/removals.
- Voluntary third-party assurance under Part 3, aligned with ISO 14065.
Why Organizations Use It
- Meets regulatory demands (e.g., CSRD, SB-253), enables green finance.
- Builds investor trust, mitigates greenwashing risks.
- Identifies decarbonization hotspots, supports net-zero strategies.
- Enhances comparability, stakeholder credibility.
Implementation Overview
- **Phased approachgovernance, boundary setting, data collection, quantification, verification.
- Suits all sizes/industries globally; 6-12 months typical for mid-sized firms.
- Requires cross-functional teams, software/tools; optional certification via verification statements. (178 words)
Key Differences
| Aspect | SOX | ISO 14064 |
|---|---|---|
| Scope | Financial reporting internal controls | GHG emissions inventories and verification |
| Industry | US public companies, all sectors | All organizations worldwide, any sector |
| Nature | Mandatory US federal law | Voluntary international standard |
| Testing | Annual ICFR audits by PCAOB auditors | Optional third-party GHG verification |
| Penalties | Criminal fines, imprisonment for executives | No legal penalties, certification loss |
Scope
Industry
Nature
Testing
Penalties
Frequently Asked Questions
Common questions about SOX and ISO 14064
SOX FAQ
ISO 14064 FAQ
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