The SOX Act has two key provisions, which pertain to the necessary actions that must be taken by businesses in order to abide by the SOX Act and avoid penalty and possible jail time. The firs of which is Section 302 of the SOX Act which states that senior management sign off of the accuracy and validity of the accounting records and financial statements. The other key provision is Section 404. Section 404 details must establish internal controls and reporting methods to also verify the validity of records and have reports on how adequate these methods are.
For companies that have violated the SOX Act strict penalties are in force. Some companies may try to rid the problem of ever existing by shredding documents to escape being caught. If a company knowingly falsifies, alters, covers-up, or destroys any litigation related paperwork that company is subject to punishment for criminal obstruction and would likely face heavy penalty and jail time under Section 802 of the SOX Act. Section 802 states the penalties for which a company could face for the destruction of documents could