In the present age, it is increasingly common to find many organizations, including industry titans, take near-fatal blows at the hands of non-compliance. Regulatory bodies around the world keep slapping fines and issuing notices to non-compliant companies. In 2020 alone, the largest non-compliance fine was paid by Wells Fargo, which was to the tune of $3 billion. Considering the financial consequences and likelihood of lasting reputational damage, staying compliant is of utmost priority for corporate boards.

On July 30, 2002, the American Congress passed the Sarbanes-Oxley (SOX) act to improve corporate disclosure accountability, transparency, and corporate governance across a public company. The SOX act is intended to protect the shareholders and the general public from business accounting errors and fraudulent activities. The act was passed in a reaction to a series of financial scandals that occurred during 2000-2002 period such as Enron, Tyco, and WorldCom.

In general, compliance refers to all the laws, regulations, and policies that an organization should confirm. When in compliance, the organization, employees, and third-party vendors will behave according to the laws and standards of the regulatory and industry bodies. The essence is that compliance helps organizations to act responsibly and obey regulations related to labor, work safety, finance, operations, and accounting standards.