What Are SOX Controls? Importance and Best Practices

For IT and security leaders, achieving SOX compliance involves understanding and implementing various controls to protect financial data and ensure accurate reporting. The average U.S. organization spends around $1 million annually on SOX compliance due to increasing complexities in financial systems and cybersecurity requirements. The 4 SOX controls—access controls, change management, data security, and audit trails—are critical for maintaining compliance. A SOX checklist helps structure these controls, providing a roadmap to ensure proper implementation and monitoring. Key steps in SOX compliance include identifying risks, implementing controls, testing them regularly, and preparing for audits. Additionally, the 6 ITGC (IT General Controls), which cover areas like access management and backup procedures, are essential for supporting SOX compliance. To meet the SOX compliance requirements, IT teams must ensure that these controls protect financial systems from unauthorized access and potential fraud, with a clear SOX controls list guiding the way. 

By following a detailed compliance checklist, IT and security leaders can manage these critical controls, safeguard their systems, and meet regulatory standards effectively.

What Are SOX Controls?

SOX controls play a key role in financial reporting, ensuring reliability and accountability. Historical context and enactment shape their current application. This section also touches on sox controls examples, providing a quick overview of regulatory impact and practical application in practice.

Importance in Financial Reporting

SOX controls maintain consistency in financial reporting by ensuring that sensitive information is properly managed and verified throughout the reporting process. They help organizations meet regulatory expectations and reduce the risk of inaccuracies that could lead to financial discrepancies or legal challenges.

These measures allow businesses to establish transparent, systematic processes that enhance accountability and trust. Financial teams use SOX controls to create a record of all critical transactions, which supports auditing efforts and fosters confidence among stakeholders.

Historical Context and Enactment

SOX controls emerged from a need to rebuild confidence in financial practices following major corporate setbacks. The enforcement of legislative measures marked a turning point in accountability and regulation, reflected in significant events and milestones:

• 2002: Legislation enacted in response to financial scandals
• 2003: Implementation of rigorous compliance frameworks within organizations

The historical journey of these controls shows how the legal framework evolved to ensure trustworthy financial reporting and secure record keeping. Practical steps taken during implementation illustrate real-world applications that mitigate risks and provide clear guidance for IT and security professionals.

What Are SOX Compliance Requirements?

SOX compliance requirements are rooted in the Sarbanes-Oxley Act of 2002 (SOX), designed to enhance corporate governance and protect investors by ensuring transparency and accuracy in financial reporting. For IT and security leaders, SOX compliance primarily involves safeguarding financial data and implementing stringent internal controls to prevent fraud, data breaches, and unauthorized access. Here’s an overview of the key SOX compliance requirements that IT and security teams must manage to ensure their organization meets the necessary standards.

1. Section 302: Corporate Responsibility for Financial Reports

Under Section 302 of SOX, the company’s CEO and CFO must personally certify the accuracy and completeness of the company’s financial reports. They are required to confirm that they have reviewed the financial statements and that the internal controls supporting these reports are effective. For IT teams, this means ensuring that the systems collecting, processing, and storing financial data are secure and reliable. Key responsibilities include:

• Data Security: Ensuring financial data is encrypted and protected from unauthorized access.
• Access Control: Restricting access to financial data to authorized personnel and tracking all access events.

2. Section 404: Management Assessment of Internal Controls

Section 404 is one of the most crucial and resource-intensive aspects of SOX compliance. It requires organizations to document, test, and maintain internal controls over financial reporting (ICFR). Both management and external auditors must attest to the effectiveness of these controls. For IT and security leaders, this section requires implementing robust controls to ensure the accuracy, security, and integrity of financial systems. This can include:

• Change Management: Documenting and controlling any changes made to financial systems, ensuring that updates do not compromise data accuracy or security.
• Audit Trails: Maintaining detailed records of all actions involving financial data to provide clear evidence of control effectiveness during a SOX audit.

3. Access Controls

A key part of SOX compliance is ensuring that only authorized individuals have access to sensitive financial systems. This is achieved through role-based access control (RBAC) and multi-factor authentication (MFA). IT teams must regularly audit and review access logs to detect unauthorized access attempts or irregular behavior. For example, SOX compliance requires reviewing who can access financial systems, how access is granted, and how user privileges are monitored.

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4. Data Integrity and Security

Data security and integrity are at the heart of SOX compliance. Financial data must be protected against unauthorized access, tampering, or breaches. Encryption of data at rest and in transit, as well as continuous monitoring of networks for anomalies, are critical to SOX compliance. Regular security assessments, vulnerability scans, and patch management help ensure that financial systems are protected from potential threats.

5. Audit Trails and Monitoring

SOX requires comprehensive audit trails to track every interaction with financial systems, including any changes to data or system configurations. IT and security teams must ensure that logs are maintained and secured. Monitoring tools can automate the detection of irregularities and suspicious activity, helping organizations quickly identify and respond to potential compliance issues.

6. Regular Testing of Controls

Continuous testing and monitoring of controls are essential to maintain SOX compliance. This involves conducting regular internal audits to ensure that financial systems and internal controls are functioning as intended. IT teams often automate parts of this process, using tools that can monitor systems in real-time and generate compliance reports.

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What Are the 4 SOX Controls?

SOX mandates internal controls for financial reporting to prevent fraud and protect investors. For IT and security leaders, implementing SOX controls is crucial to securing financial data and ensuring compliance. The four key SOX controls form the foundation of a comprehensive compliance strategy, focusing on access, change management, data security, and audit trails.

1. Access Control

Access control is the first critical component in SOX compliance. This control ensures that only authorized personnel have access to sensitive financial systems and data. A SOX ITGC (IT General Controls) controls list would typically include policies like role-based access control (RBAC), which restricts system access based on job responsibilities. Additionally, multi-factor authentication (MFA) can be implemented to add layers of security, ensuring only verified individuals can access critical financial information.

One example of a SOX-compliant organization is one that regularly audits user permissions and logs all access attempts. For IT and security leaders, this might include maintaining a SOX IT controls checklist that covers everything from user authentication to tracking attempts at unauthorized access. The Sox controls list should ensure that financial systems are regularly reviewed to minimize exposure to data breaches.

2. Change Management

Change management is another core control required under SOX. IT systems that manage financial data undergo constant updates, software patches, and configuration changes. SOX requires that all such changes are documented, reviewed, and authorized. A robust change management process helps prevent unauthorized alterations to financial systems that could jeopardize data integrity or result in fraudulent reporting.

In practice, this control involves maintaining a SOX ITGC controls matrix that tracks all system changes, ensuring that only authorized personnel have the ability to modify financial data. One SOX controls example would be a financial system update that goes through a multi-step approval process to ensure compliance. The system update must be thoroughly documented, tested in a non-production environment, and reviewed by multiple stakeholders before being implemented.

3. Data Security

Data security is a cornerstone of SOX compliance. Financial data must be encrypted and safeguarded against unauthorized access. IT and security teams are responsible for implementing robust encryption for both data at rest and data in transit. Regular vulnerability assessments, firewalls, and intrusion detection systems are common in a SOX IT controls checklist.

A SOX controls list PDF would include mandatory tasks like ensuring data encryption standards are up to date, firewalls are configured correctly, and intrusion detection systems are operational. Maintaining these data security controls not only helps protect financial data but also provides evidence of compliance during audits.

4. Audit Trails

Audit trails form the final critical control in SOX compliance. These are detailed records of all system interactions, including user access, data changes, and system modifications. Audit trails allow organizations to track who made changes to financial systems and verify whether the changes were authorized.

A SOX ITGC controls list would include keeping comprehensive logs of all access and changes to financial systems, with audit trails secured and available for review during external audits. For example, an organization that logs every user action within its financial reporting systems—such as logins, data modifications, or access rights changes—would be implementing this control effectively.

For IT and security leaders, managing the four key SOX controls—access control, change management, data security, and audit trails—is essential for compliance. These controls should be regularly tested, monitored, and documented through detailed checklists and frameworks like a SOX ITGC controls matrix or a SOX controls list PDF. By implementing these controls effectively, organizations can secure their financial systems, ensure data integrity, and meet the stringent requirements set forth by SOX compliance.

Benefits of Effective SOX Controls

This section explains how effective SOX controls lead to enhanced financial accuracy and transparency, ensuring faster verification of critical transactions. It also highlights how improved investor confidence supports better trust and stability in financial reporting. The upcoming topics provide clear, actionable insights for IT and security professionals managing compliance efforts.

Enhanced Financial Accuracy and Transparency

Effective SOX controls build a solid framework for accurate recordkeeping and clear financial reporting. They help IT and security leaders monitor transactions closely, ensuring that every step of the process is verified and compliant with industry standards.

Enhanced financial accuracy directly leads to greater stakeholder trust and smoother audit processes:

• Data Verification: Ensures precise recordkeeping
• Compliance Monitoring: Facilitates seamless audit trails
• Risk Reduction: Builds confidence among stakeholders

Improved Investor Confidence

Improved investor confidence comes from consistent financial record keeping under SOX controls. Investors see clear, verified transactions and robust oversight, which increases their trust in the organization's financial statements.

With solid internal practices and regular checks, IT and security teams build stability in financial reporting. This clear approach assures investors that all data is accurate and secure, making the organization a more attractive prospect for long-term investment.

Common Challenges in SOX Controls

Regulatory changes, resource constraints, third-party risks, and ensuring consistent control application present real hurdles for organizations. Each challenge impacts financial reporting, compliance efforts, and operational efficiency, making it essential for IT and security professionals to adopt clear strategies for overcoming these obstacles. The following sections provide actionable insights on addressing these issues effectively.

Keeping Up with Regulatory Changes

Regulatory changes create operational challenges for IT and security professionals who manage SOX controls. These changes require continuous monitoring and adjustments in procedures to ensure compliance without impacting routine financial audits:

• Regular review of policy updates
• Timely implementation of new standards
• Ongoing training for staff

Organizations prioritize agile adaptation as a key strategy to maintain control integrity in a changing regulatory environment. By scheduling periodic assessments and refining internal processes, they address potential gaps and ensure that financial reporting remains secure and precise.

Resource Constraints

Resource constraints affect the deployment of SOX controls, as limited budgets and staffing can delay the integration of updated processes. IT and security professionals often face challenges when allocating resources for timely audits and routine reviews.

Organizations address these challenges by prioritizing investments in automation and lean operational strategies. This approach supports efficient compliance and focused oversight:

• Investing in automated monitoring tools
• Training existing staff for multi-role flexibility
• Optimizing workflow processes with cross-department collaboration

Managing Third-Party Risks

Managing third-party risks remains a constant focus for IT and security professionals responsible for overseeing SOX controls. Clear processes in vendor oversight support accurate recordkeeping and secure financial data flow, ensuring that every external partnership is evaluated carefully:

• Vendor Data Access: Conduct regular access reviews
• Service Integrity: Implement systematic performance evaluations

Experts suggest that incorporating stringent review checkpoints for vendor services helps maintain compliance with regulatory requirements. IT leaders use practical examples from past audits to tune these oversight practices and ensure that external risks are kept to an absolute minimum.

Ensuring Consistent Control Application

Organizations face hurdles when applying clear, repeatable SOX controls across all departments. They stress the importance of systematic checks that allow IT and security leaders to maintain oversight without lapses, ensuring processes remain tight and compliant:

• Regular policy reviews
• Clearly defined responsibilities
• Streamlined audit procedures

Practical steps include standardizing procedures and using automated tools to track record modifications. This approach reduces errors and supports continuous monitoring, which helps maintain consistent control application across operations.

Implementing SOX Controls

Implementing SOX controls involves establishing a control framework, identifying key processes and risks, designing and documenting controls, assigning control ownership, and running training and awareness programs. The following sections explain each focus area with practical insights, offering IT and security leaders clear guidance to build a reliable compliance structure and maintain accurate financial reporting.

Establishing a Control Framework

Establishing a control framework begins with identifying critical processes and evaluating potential risks that can affect financial reporting. IT and security professionals work together to document these steps clearly, ensuring that each process is measurable and aligned with SOX controls requirements:

• Define risk areas
• Outline control procedures
• Assign clear ownership

A structured framework supports seamless oversight and continuous review, empowering teams to monitor financial data accurately. IT and security leaders find practical benefits in regular updates to these frameworks, which enable real-time adjustments and effective compliance management.

Identifying Key Processes and Risks

The process of identifying key processes and risks starts with mapping out every step that influences financial reporting. IT and security professionals review workflows and assess potential vulnerabilities to pinpoint areas where SOX controls can structure a more effective oversight process.

This practice involves evaluating system access, monitoring transaction methods, and verifying data flows that affect recordkeeping. Experts emphasize that thorough assessment offers clear insights, allowing teams to streamline compliance and reduce risk when implementing SOX controls.

Designing and Documenting Controls

Designing and documenting controls requires a clear approach that aligns with risk management and regulatory guidelines. IT and security professionals rely on practical examples from past implementations to create straightforward control processes that meet compliance requirements and support reliable financial reporting.

Documented controls serve as a detailed record for audits and regular reviews, assuring teams that financial data remains accurate and secure. IT and security leaders use hands-on expertise to tailor these controls, ensuring that each documented process is easy to follow and effectively mitigates risks.

Assigning Control Ownership

Assigning control ownership ensures every financial process under SOX controls has a dedicated leader who understands the system's requirements. IT and security experts set clear responsibilities so that each process is monitored and any issues are resolved quickly.

Clear ownership of controls empowers teams to manage risks effectively while maintaining precise financial records. IT and security professionals often rely on real-world examples and straightforward guidelines to assign and manage control ownership efficiently, addressing common operational concerns.

Training and Awareness Programs

IT and security professionals implement training and awareness programs to support effective SOX controls by ensuring that all team members understand specific compliance guidelines. This investment in practical training enables teams to quickly adapt policies and execute streamlined processes to maintain secure financial reporting:

• Conduct regular training sessions
• Implement hands-on workshops
• Run periodic refresher courses

Comprehensive training initiatives are customized to meet the needs of IT and security professionals with clear, actionable guidelines that address common challenges. These programs help build a knowledgeable workforce that efficiently manages record verification and maintains compliance standards.

What Are the 6 ITGC Controls?

IT General Controls (ITGC) form the foundation of SOX compliance for IT and security teams, focusing on ensuring the reliability, integrity, and security of financial reporting systems. These controls address the risks associated with IT environments, including unauthorized access, data tampering, and operational failures. Let’s dive into the six key ITGC controls that are critical for compliance and security.

1. Access Controls

• Access Controls ensure that only authorized individuals have access to sensitive systems and data. In the context of SOX compliance, access control mechanisms help limit who can view or modify financial data, reducing the risk of unauthorized changes that could impact financial reporting. This includes:some text
  • Role-Based Access Control (RBAC): Granting system access based on job roles and responsibilities.
  • Multi-Factor Authentication (MFA): Adding extra layers of security by requiring multiple forms of verification.

IT teams should maintain and audit access logs, regularly reviewing permissions and ensuring that access is revoked promptly when employees leave the organization.

2. Change Management Controls

Change management controls are designed to monitor and regulate any changes to IT systems, including software updates, system configurations, and patches. In SOX compliance, these controls ensure that unauthorized or unapproved changes don’t negatively affect financial systems. 

For example, before applying a software patch to a financial system, IT teams must follow a formal process of review, testing, approval, and documentation to maintain SOX compliance. This process reduces the risk of introducing vulnerabilities or errors that could compromise financial reporting.

3. Data Backup and Recovery Controls

Data backup and recovery controls ensure that financial data can be restored in case of hardware failure, cyberattacks, or human error. SOX compliance mandates that organizations maintain reliable backup systems to protect the availability and integrity of financial information.

This control requires:

• Regular backups of financial data.
• Testing of recovery procedures to ensure they work as intended.
• Secure offsite storage of backup data to protect against disasters like fire or theft.

A strong backup and recovery strategy ensures business continuity and protects financial data from permanent loss, which is crucial for both security and compliance.

4. System Development Lifecycle (SDLC) Controls

The System Development Lifecycle (SDLC) controls ensure that new systems, software, or applications are developed, tested, and implemented securely. These controls focus on managing risks related to the development and deployment of new technology, particularly those that interact with financial reporting systems.

In a SOX-compliant organization, SDLC controls would include:

• A formal review process for any new software or system.
• Rigorous testing in a non-production environment.
• Documentation of risks, mitigations, and approvals before deployment.

These processes ensure that new technology integrates seamlessly with existing financial systems without introducing new risks or vulnerabilities.

5. Incident Management Controls

Incident management controls are crucial for identifying, tracking, and responding to security incidents. Whether it’s a data breach, malware attack, or unauthorized access attempt, IT teams need to have a robust incident response plan to handle such events.

SOX compliance requires organizations to document all incidents, conduct root cause analyses, and ensure that corrective actions are taken to prevent future occurrences. Having an incident response framework in place ensures that financial data is protected and that any threats are swiftly neutralized.

6. IT Operations Controls

IT operations controls focus on ensuring that IT infrastructure, hardware, and software systems are running efficiently and securely. These controls monitor performance, capacity, and availability to ensure systems are reliable and able to support financial reporting processes.

Key elements of IT operations controls include:

• Performance Monitoring: Ensuring systems operate optimally and can handle increased loads.
• Patch Management: Regularly updating software and hardware to mitigate vulnerabilities.
• System Maintenance: Ensuring systems are functioning correctly and addressing any potential issues proactively.

SOX Controls Testing and Evaluation

This section outlines a practical plan covering the design of testing plans, execution of control tests, recording deficiencies, remediation steps, and continuous monitoring. The detailed discussions offer actionable insights for IT and security professionals to ensure financial data compliance and robust verification practices.

Developing a Testing Plan

Developing a testing plan for SOX controls helps organizations set clear objectives and define methods to verify compliance. IT and security professionals design concise testing strategies that provide practical checkpoints for monitoring financial data and mitigating risk.

Creating a structured testing plan supports continuous oversight of key financial processes and assures data integrity. This process gives IT and security teams actionable steps to validate internal controls and ensure that each component meets strict regulatory standards.

Executing Control Tests

IT and security teams conduct control tests to verify every step of financial operations through focused evaluation methods that support clear oversight. They apply practical measures and real-world scenarios to check system integrity and ensure that each control meets required benchmarks.

Organizations implement hands-on control tests that serve as checkpoints to confirm data accuracy and timely record verification. This approach provides immediate feedback to IT professionals and helps refine processes for more efficient compliance management.

Identifying and Documenting Deficiencies

Identifying deficiencies during SOX controls testing and evaluation requires clear observation and careful documentation of any deviations in financial processes. IT and security professionals record each irregularity as they review control performance, ensuring that every instance is detailed for prompt resolution.

Documenting deficiencies helps refine control measures and supports continuous improvement in recordkeeping practices. IT experts note each finding and frequently apply practical examples from past audits to strengthen the overall compliance framework and reduce future risks.

Remediation Strategies

Effective remediation strategies focus on identifying and addressing shortcomings in SOX controls during testing and evaluation. IT professionals apply practical fixes to issues found, streamlining internal processes and ensuring financial data remains reliable. This method supports clear accountability and smooth audit trails for the organization.

Remediation steps involve prompt, targeted actions to correct any errors uncovered during evaluations. Teams use proven techniques to resolve discrepancies, restoring confidence in financial reporting. This active approach helps maintain robust internal controls and meets compliance requirements consistently.

Ongoing Monitoring and Maintenance

Ongoing monitoring and maintenance is essential for keeping SOX controls effective in managing financial data. IT and security professionals regularly review control outputs and adjust practices as needed to ensure that each safeguard remains aligned with regulatory standards and internal risk management goals.

Continuous oversight supports a systematic approach to control performance assessment and timely remediation of issues. By tracking system changes and compliance results, organizations uphold transparent verification practices that prevent discrepancies and secure reliable financial reporting.

Role of IT in SOX Compliance

IT controls form the backbone of SOX compliance. This section outlines the significance of IT controls, change management, access controls with segregation of duties, reliable data backup and recovery, and cybersecurity measures. It prepares IT and security professionals to understand how these areas interact to keep financial data secure and ensure smooth regulatory adherence.

Importance of IT Controls

IT controls are vital in maintaining data integrity and streamlining compliance efforts for financial reporting. They enable clear oversight of system processes and support routine evaluations that safeguard critical records, which is especially valuable for IT and security professionals managing regulatory requirements.

Practical IT controls simplify audit processes and help organizations respond quickly to operational risks. They provide actionable checkpoints that assure precise data flow and strict adherence to SOX compliance, building trust and delivering tangible benefits for IT teams and stakeholders alike.

Change Management Procedures

Change management procedures help IT professionals adjust financial systems securely while supporting SOX controls. Clear change management steps ensure that every system modification is approved, documented, and tested to meet compliance and secure financial data.

IT teams use change management protocols to pinpoint and address risks in financial reporting processes. These procedures provide actionable measures that simplify audits and reduce compliance challenges for security professionals.

Access Controls and Segregation of Duties

Access controls and segregation of duties are fundamental for maintaining secure systems and reliable financial records. IT professionals implement strict user permissions to ensure that each team member only accesses data relevant to their role, reducing the chance of errors and unauthorized changes.

This approach promotes accountability within the organization and simplifies tracking activities during audits. Teams apply clear access protocols and regularly review role assignments, which supports ongoing compliance and minimizes risk in financial reporting.

Data Backup and Recovery

Data backup and recovery play a vital role in maintaining the integrity of financial reporting under SOX compliance. IT teams implement secure backup systems and recovery procedures to protect sensitive data in case of system failures or data breaches. This careful management of file storage reassures stakeholders and supports a resilient internal control environment.

IT professionals routinely test recovery procedures to ensure that system integrity remains intact during audits and unexpected disruptions. By storing copies of critical information in secure, accessible locations, these teams provide a clear path to restoring data after incidents, reinforcing strong compliance measures and reducing downtime. This methodical approach offers practical benefits that contribute to dependable financial oversight and regulatory adherence.

Cybersecurity Considerations

IT professionals rely on cybersecurity practices to secure financial records under SOX requirements. They routinely test security measures and update protocols to safeguard data against unauthorized access, ensuring financial processes remain robust and compliant.

Focused on real-world challenges, IT and security teams prioritize streamlined cybersecurity protocols to protect financial transactions. They implement proven strategies to monitor system vulnerabilities, offering clear guidance that assures stakeholders of data integrity and reliability.

Establish Clear SOX Controls with Lumos

SOX controls form the backbone of a strong financial governance framework—enabling accurate reporting, regulatory compliance, and reduced organizational risk. For IT and security teams, these controls provide the structure to safeguard data integrity, verify transactions, enforce internal checks, and prevent unauthorized access. When properly implemented, SOX controls support accountability, streamline operations, and build lasting trust with auditors, investors, and stakeholders.

But as compliance requirements expand and the pace of business accelerates, maintaining effective SOX controls manually has become increasingly unsustainable.

That’s where Lumos comes in.

Lumos is the first autonomous identity platform purpose-built to simplify complex governance challenges like SOX. By bringing together deep access visibility, least-privilege enforcement, and policy-driven automation, Lumos makes it easier to implement and manage SOX controls at scale—without overloading your team.

With Lumos, you can:

• Continuously monitor access to financial systems and enforce least-privilege policies.
• Automate user access reviews, provisioning, and deprovisioning with full audit trails.
• Detect over-permissioned accounts and risky access patterns before they become compliance violations.
• Map entitlements and identities across cloud, SaaS, and legacy systems for unified SOX oversight.
• Provide real-time reporting and evidence to auditors—no more scrambling during audit season.

SOX compliance shouldn’t be a once-a-year fire drill. With Lumos, it becomes a sustainable, proactive part of your security and governance program.

Ready to simplify SOX controls and stay audit-ready all year long? Book a demo with Lumos today and see how autonomous identity can transform your compliance strategy.

SOX Controls FAQs

What defines SOX controls in a business setup?

Sox controls define a framework of procedures ensuring reliable financial reporting, robust data access management, and overall governance in business setups. This framework supports IT security and compliance efforts effectively.

How does IT support compliance with SOX controls?

It supports SOX compliance by unifying identity management, automating access reviews, and simplifying user lifecycle processes. This streamlined approach minimizes risk, maintains audit trails, and ensures secure access control for all applications.

What are the main challenges with SOX controls?

Sox controls challenge organizations with complex documentation, continuous monitoring, and compliance expenses. Maintaining rigorous access legitimacy and tracking employee lifecycle changes demands constant attention from IT and security teams.

Which control types align with SOX requirements?

SOX requirements favor control types including automated controls, manual processes, and IT general controls that support access management, audit reporting, and transaction monitoring while minimizing sprawl and identity fatigue in employee lifecycle management.

How regularly should organizations test SOX controls?

Organizations should test SOX controls annually with interim reviews throughout the year to ensure sustained compliance and address evolving risks.

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