UK SOX Compliance: Key Considerations for Finance Leaders

Finance leaders, are you prepared for the new regulations coming to the United Kingdom, and do you have the right risk management in place? The landscape has evolved significantly since initial discussions began. Requirements aligned with U.K. SOX, the informal term for broader U.K. corporate governance reforms that include Provision 29 of the U.K. Corporate Governance Code, will begin on January 1, 2026. From this date, businesses must more closely monitor and declare the effectiveness of their financial risk and internal control frameworks.

Recent data reveals that many companies still aren’t ready for these changes, creating compliance risks and competitive disadvantages for unprepared organisations. Only 22% of companies have documented evidence of the internal controls required under U.K. SOX (up from 16% in 2024). This challenge is compounded by additional regulatory pressures, including new failure-to-prevent-fraud requirements that further emphasize the need for robust internal controls.

What is UK SOX Compliance?

U.K. SOX introduces new requirements for how U.K. companies assess and report on their internal controls, placing greater accountability on senior leadership. Prompted by a series of corporate failures, the U.K. government launched governance reforms in 2022 to restore trust in financial reporting. One key outcome was the revision of Provision 29 in the U.K. Corporate Governance Code, finalized in 2024. Often referred to as "U.K. SOX," this provision requires boards to formally declare the effectiveness of their internal controls starting in January 2026. However, broader reform plans — including replacing the Financial Reporting Council (FRC) with a stronger regulator — were ultimately scaled back.

In essence, business boards will be responsible for annual declarations on internal controls for all materials, including what’s necessary to prevent errors, fraud, or operational failures. Companies should be prepared to report for the first time in their 2026 annual reports, which are typically published in early 2027.

Key UK SOX Requirements

“I think it’s really important that boards recognize that with what we’ve done, we are very clearly signaling to them that they have to think for themselves in two key aspects. First, boards will need to take their own view of what they consider the material internal controls are, and only boards can do that under certain circumstances of their business and strategy,” said Richard Moriarty, Chief Executive Officer at FRC, during a webinar. “Secondly, it’s important that boards come to their own view on what assurances they want on the level of effectiveness for those controls.”

Is UK SOX the same as US SOX?

U.K. SOX was the original reform concept inspired by the U.S. Sarbanes-Oxley Act. However, what has actually transpired differs significantly from both the original U.K. SOX vision and U.S. SOX requirements. The FRC is clear that the updated code requirements are not the same as those under U.S. SOX and that it is not expecting organisations to take the same approach.

Key similarities:

• Both require senior leadership attestation to the effectiveness of their internal control
• Both emphasise robust financial reporting controls
• Both mandate regular monitoring and testing of control frameworks
• Both aim to prevent fraud and enhance transparency

Key differences:

• U.K. requirements cover all material controls, not just financial reporting.
• U.K. framework operates on a “comply or explain” basis rather than strict legal mandates.
• U.K. approach is designed to be more proportionate and less burdensome than U.S. SOX.
• U.K. companies are given greater discretion and judgment in how they implement and evaluate control effectiveness.

Why does UK SOX matter to finance, procurement, and IT departments?

The U.K. SOX reforms have significant implications across multiple business functions and require coordinated efforts to achieve compliance.

Finance departments must take a proactive approach to establishing comprehensive financial reporting controls, implementing robust internal audit processes, and ensuring accurate, timely financial disclosures. The framework requires finance teams to document all material financial processes and demonstrate their effectiveness through regular testing and monitoring.

Procurement departments face new pressure to achieve enhanced spend visibility, supplier risk management, and purchase authorization controls. Such reform requires that these different departments have adequate controls over and visibility into corporate purchasing practices, an area that executives frequently overlook. Procurement teams must implement standardised workflows, enforce segregation of duties, and maintain comprehensive audit trails for all purchasing activities.

IT departments play a critical role in enabling compliance through technology infrastructure, data security, and system integration. They must implement controls to ensure data integrity, maintain proper access controls, and provide the technological foundation for automated compliance monitoring and reporting.

Who is impacted?

The new regulations aren’t limited to companies on the stock exchange. U.K. SOX particularly targets all larger, private companies with more than 750 employees and over £750 million in annual turnover. This also includes the sum total of any subsidiary companies, employees, and turnover.

Premium-listed companies (equity issuers in the FTSE 100, FTSE 250, and the FTSE small cap) will be the first to be impacted. After two years, the scope of U.K. SOX is predicted to include significant public interest entities (PIEs) whose transferable securities are admitted to trading on the U.K.-regulated market.

UK SOX implementation timeline

The implementation timeline for U.K. SOX reforms, enacted through the U.K. Corporate Governance Code, has been finalised with specific effective dates:

• January 1, 2026: Additional implementation time has been allowed for the provisions relating to the declaration on material controls, which will apply to financial years beginning on or after this date. This means the first reports will be required in 2027 (one full financial year after January 1, 2026).
• Ongoing: Companies must begin implementing comprehensive internal control frameworks and risk management processes immediately to ensure readiness for the declaration requirements.

What should you be doing right now to ensure UK SOX compliance?

With the regulations now in effect, organisations must take immediate action to establish compliant internal control frameworks. The time for preparation has passed — implementation is now critical.

Immediate actions required

Establish a material controls framework: Organisations must identify and document all material controls across financial, operational, compliance, and non-financial reporting areas. This requires comprehensive risk assessments to determine which controls are material to the organisation’s operations and reporting.

Implement robust financial processes: Finance teams need comprehensive systems for tracking all financial transactions, maintaining accurate records, and implementing checks and balances to prevent errors and fraud. This includes establishing proper segregation of duties, regular internal audits, and robust financial systems with quality control measures.

Deploy technology solutions: A cloud-based spend management platform eliminates most SOX complexities by facilitating the organisation and updating of documentation, providing real-time visibility into testing progress, streamlining evidence gathering, tracking issues that require remediation, and generating reporting for stakeholders.

Create audit-ready documentation: Maintain comprehensive documentation of all control processes, testing results, and remediation activities. This documentation must be readily accessible for both internal monitoring and external audit requirements.

How the Coupa AI-Native Total Spend Management platform helps you achieve compliance

The Coupa AI-native Total Spend Management platform transforms compliance from a burden into a competitive advantage by providing comprehensive spend visibility, automated controls, and intelligent risk management capabilities that exceed traditional spend management platform functionality. Coupa’s AI-native Total Spend Management platform enables a more straightforward, smoother compliance process by:

Establishing robust and comprehensive financial processes

Coupa’s AI-native platform revolutionises financial process management by providing end-to-end visibility across all spending activities. It integrates seamlessly with existing ERP systems to create a unified view of purchases, invoices, payments, expenses, and scheduled accruals.

With advanced automation capabilities, the platform minimizes manual errors and streamlines compliance reporting. Intelligent matching algorithms enable first-time invoice match rates of 97.1%, dramatically reducing the risk of financial discrepancies that can trigger compliance issues.

The AI-native architecture continuously monitors spending patterns and automatically flags potential irregularities or policy violations in real time. This proactive approach to fraud detection goes beyond traditional rule-based systems by learning from historical data and identifying anomalies that might indicate fraudulent activity or control failures.

Improving workflows and strengthening controls

The AI-native Total Spend Management platform enables organisations to establish sophisticated, customised workflows that enforce proper segregation of duties and ensure all transactions follow appropriate approval channels. These workflows are configured to align with specific organisational policies and regulatory requirements.

Advanced role-based access controls ensure that employees can only access functions appropriate to their responsibilities, while comprehensive audit trails capture every action taken within the system. This creates an immutable record of all spending activities that auditors can easily review and validate.

The platform’s AI capabilities continuously analyze workflow performance and recommend optimizations to improve efficiency while maintaining compliance. This intelligent approach ensures that controls remain effective as business processes evolve and scale.

Making compliance simple

Coupa provides out-of-the-box compliance capabilities for over 50 government-mandated electronic invoicing networks and clearance models worldwide. This comprehensive coverage reduces penalty risks while eliminating the need for additional software, add-ons, or complex IT configurations.

The AI-native architecture automatically maintains complete audit trails for all source-to-pay processes, including approvals, segregation of duties, controls, fraud monitoring, and financial reporting. These trails are instantly accessible to both internal teams and external auditors, streamlining the audit process.

Real-time compliance dashboards provide continuous visibility into control effectiveness, allowing finance teams to identify and address potential issues before they become compliance violations. The platform’s predictive analytics capabilities help organisations anticipate compliance risks and take proactive measures to mitigate them.

Customer success stories

“Coupa has really helped us with our SOX [Sarbanes-Oxley] compliance because we can lock down the system; we have all kinds of audit records. Our auditors were very happy when we put in the system, and obviously, the paper-based system was completely unmanageable.”

— VP Business Services, Molina Health

“Coupa Pay provides SOX-compliant approval workflows for the creation, review, and approval of payments as well as supplying access to auditors for internal and external audit.”

— Raquel Peasley, Corporate Controller, Thoughtspot