Puerto Rico Businesses and SOX | A Beneficial Alliance

The Sarbanes-Oxley Act of 2002 (SOX) remains a cornerstone of corporate governance and financial reporting. While primarily focused on public companies, its principles have had a significant impact on businesses of all sizes, including private companies, nonprofits, and other non-SEC registrants. By promoting transparency, accountability, and ethical business practices, SOX has helped to protect investors and strengthen the overall financial system.

We interviewed one of our resident SOX experts to get their insight into SOX compliance in the local landscape. One of Galíndez LLC’s experts, Gloria Sorroche, notes how SOX has affected the island: “The main impact in Puerto Rico is that SOX requires a control and risk culture embedded in a Company, which is an area where many Companies lack throughout Puerto Rico. Engagement after engagement, we noticed clients lacking key and essential controls to prevent fraud and properly safeguard assets.” Among some of the challenges implementing compliance, he mentions that “implementing SOX requires a full enterprise-wide commitment and change in way business is ran”, so the “Culture and tone” has to come from the top. 

Businesses have greatly benefited from becoming SOX-minded. Sorroche adds her opinion of one key benefit she has witnessed: “one of the SOX Compliance requirements is the implementation of an Internal Control System that must be monitored and evaluated consistently. This evaluation performed over the implemented controls assists in the identification and analysis of existing and emerging risks that could directly affect the company’s operation and financial results.” She concludes: “Although SOX is required only to Public Companies, and in Puerto Rico we have just a handful, its implementation as part of a business culture could prevent fraud, minimize risk and prepare Companies for future expansions.”

It is a matter of good business strategy locally to embrace SOX principles to strengthen a company’s internal control environment. When companies and organizations have a strong system of internal controls, they often prove to be successful in their respective marketplaces and industries. Strong internal controls push a company beyond its current limits by helping it implement best practices, retain valuable resources, and serve its customers better than its competitors. With this in mind, business owners in Puerto Rico can certainly see how SOX can prove to be a long-standing ally. 

For SOX compliance to be beneficial, you need the right team to work with you. Galíndez understands your organization’s needs and has the track record of excellence to support that. Learn more about how we can achieve SOX compliance for your organization.