In Depth

The 404 on Sarbox

Section 404 of the Sarbanes-Oxley Act (Sox) requires companies to establish controls that provide reasonable protection against preventable events that could influence a company's value.

By Ben Worthen

April 01, 2006 — CSO —

Section 404 of the Sarbanes-Oxley Act (Sox) requires companies to establish controls that provide reasonable protection against preventable events that could influence a company's value. This means, for example, making sure that employees couldn't use a company's systems to commit acts of fraud. The same logic applies to supply chains: Companies need to have controls that ­protect them against an adverse event. Other sections of Sox also could cover supply chain security. Section 401 requires companies to account for risk in their off-balance-sheet trans­actions, such as their supply chains. And Section 409 requires companies to report "on a rapid and current basis" events that could have a material impact. One can assume that a bomb in a cargo box would have such an impact.

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