Regulatory compliance: Factoring in Online Cloud Identities


In 2002, the United States Congress passed the Sarbanes-Oxley Act after the massive corporate scandals that Eron, and others, were involved in. The act was created to protect the public from organizations whose business practices and financial reporting are not transparent.

The aim was to monitor and encourage business directors to meet a collection of checkpoints as a requirement for clean financial audits. Regulatory compliance is not just a legal obligation but is considered good business practice.

When it comes to SOX compliance regulations, the dimension of cloud identity falls within section 404: Management Assessment of Internal Controls. According to this section of SOX, management is responsible for creating adequate internal control structures, including measurement tools to assess the effectiveness of such controls. The financial report should also clearly define any shortcomings discovered using the predefined controls.

Cloud Identity Checklist

As a starting point, any organization that operates using cloud-based services and, by extension, cloud-based identities should start by clearly listing and defining all the identities in use. These will include identities such as Enterprise Singe Sign-On identities, OpenID identities, and identities utilizing SAML. Depending on the vendor providing the cloud platform, the identities might be among the following: AWS IAM, Microsoft Azure identities, or Google cloud identities.

To preemptively address compliance areas concerning IT and any identities, whether localized or in the cloud, it is always a good idea to create a SOX identity management checklist. It will aid the organization in securing system assets and aligning practices with healthy record-keeping standards. Here are some examples of compliance checklist items that can be considered:

1. Inhibit manipulation of system data

Cloud ecosystems should be designed in such a way that it protects the system from fraudulent activities. A good starting point would be tracking any authentication activities by cloud identities, especially on financial systems.

2. Log timelines of critical activities

By utilizing logging algorithms that track feedback from specific metrics or datasets. Critical activities can be logged this way for scrutiny. This could, for example, be logging specific lambda executions between encryption of data at rest and encryption of data in transit. In the case of cloud identities, it might be logging user activities.

3. Design dependable data controls

Controlling the “who” and the “why” surrounding data access will greatly reduce the chances of cloud identities gaining access to information they are not privileged to. The best practice for these controls is to base the controls on the least privileged design.

4. Highlighting safeguards to auditors

Al the safeguards that have been put into place to ensure compliance of online identities should be communicated to auditors, who might not be technically inclined, in such a way that it is understandable. Some organizations even generate daily online identity audit reports for precisely this purpose.

5. Effective breach detection

From your compliance checklist, it should be clear what your contingency steps are in the case of an Identity-based breach. The best practice in this area would be to have an incident management team dealing with these occurrences.

Third-Party Solutions

Luckily organizations don’t need to face this behemoth of a task on their own. Third-party vendors exist that offer solutions that aid organizations in setting up these policies and even offer real-time monitoring of such directives on behalf of the organization. This frees the organization from having to employ audit and compliance specialists. External vendors also offer automated real-time monitoring of these online identities, highlighting possible breaches before they happen.


For any organization, big or small, the matter of regulatory compliance should be a serious one. The ability of an organization to meet the security standards to satisfy the benchmark requirements, as laid out by SOX, brings peace of mind. This piece of mind applies to both the organization and its shareholders. The compliance regulations surrounding online identities boil down to instilling sufficient control and monitoring policies and practices that are achievable and realistic. Establishing effective compliance policies and honoring them will inevitably go a long way towards creating a positive reputation for the organization in the marketplace.