Preparing for UK SOX – 4 things to know
What is UK SOX?
UK SOX is the unofficial name given to the UK new corporate governance reforms which will be coming into place soon. The Government has announced details of its corporate governance reforms which will move the UK regime closer to the US Sarbanes-Oxley regulations.
What will it mean for UK organisations?
The major change is the creation of a regulator for corporate governance, known as the Audit, Reporting and Governance Authority (ARGA) which will replace the Financial Reporting Council (FRC).
This new regime places substantial new reporting requirements on directors and is likely to involve a significant investment of time and planning to ensure the organisation is compliant and has processes in place to remain so. The standout change is new requirements for public disclosures by the directors of a company including a Director’s Responsibility statement, a Statement on Fraud, a Resilience statement and an Audit and Assurance Policy (AAP).
Which businesses are affected by UK SOX?
The proposals seek to expand the definition of Public Interest Entities (PIEs) which will bring into scope large privately owned companies as well as AIM listed businesses.
When does this new compliance regulation begin?
The key UK SOX deadline that has been revealed so far is that the new regulations will apply to any financial years ending in December 2023 or later. The following dates are estimated timeframes and are still subject to change:
Spring 2023– New regulatory body (ARGA) takes control of proceedings.
Late 2023– The final version of the UK SOX legislation is agreed upon.
Late 2024– UK SOX is in full effect. This estimation considers the time it will take to finalise and implement the legislation for all companies. It also considers the grace period businesses were given during the US rollout.