Changes to the Australian Privacy Act are bound to trigger the same uncertainties introduced by the the USA’s Sarbanes-Oxley (SOX) legislation, with organisations at risk of financial and reputation damage if unable to adjust to the challenges, according to Centrify APAC regional director, Matt Ramsey.
SOX was enacted in 2002, and strengthened compliance standards for US public company boards, management and public accounting firms by requiring top managers top individually certify the accuracy of financial information, applying more severe penalties for fraudulent financial activity.
“While SOX has raised the compliance bar for corporate reporting, it has had the unintended impact of creating a lot of uncertainty because of its lack of precision,” he said.
“SOX compliance costs and complexity have run out of control in the US during the past decade. The SOX legislation is prescriptive without being descriptive; it tells you to jump, but not how high. As a result, US corporations need to jump a very high bar to avoid the threat of non-compliance.”
From March, the Privacy Amendment (Enhancing Privacy Protection) Act 2012 will implement a new set of harmonised privacy principles to regulate the handling of personal information by both Australian businesses and government agencies. Ramsay attributes the revisions to Cloud services and mobility.
Ramsey claims these changes risk the cost and compliance challenges of the SOX legislation as it will require organisations to “take reasonable steps” to demonstrate compliance without specifying exact obligations.
“What makes this smell a little ‘SOX-ish’ is the imprecision of the term ‘reasonable steps’ to control such broad area as data access and control, which are essential aspects of information security and cooperation between IT, legal, risk and executive management without any specific guidance as to which internal controls must be assessed.”
To comply with the privacy principles without onerous costs and complexity, Ramsay said organisations must precisely manage individual identities by embracing approaches such as Single Sign-On (SS) authentication and least privilege access controls.
Failure to meet the new obligations can result in penalties ranging from $340,000 for an individual to $1.7 million for an agency, in addition to possible reputational brand damage as a result of investigation.