SOX Compliance (Sarbanes-Oxley)

SOX Compliance (Sarbanes-Oxley)

Public companies face intensive scrutiny of IT controls supporting financial reporting. SOX Section 404 requires documentation and testing of internal controls over financial reporting (ICFR), including the IT general controls (ITGCs) that underpin financial systems. We help you implement efficient, audit-ready IT controls that satisfy both internal and external auditors.

What is SOX?

The Sarbanes-Oxley Act of 2002 was enacted after major corporate accounting scandals. Section 404 requires management to assess and auditors to attest to the effectiveness of internal controls over financial reporting.

IT’s Role in SOX: While SOX focuses on financial controls, IT systems process financial data, making IT general controls critical to SOX compliance.

IT General Controls (ITGCs)

ITGCs are the foundation of SOX IT compliance. They ensure financial systems operate securely, accurately, and reliably.

The Five ITGC Categories:

1. Access Controls

  • User provisioning and de-provisioning
  • Role-based access control (RBAC)
  • Segregation of duties (SOD)
  • Privileged access management
  • Periodic access reviews and recertifications
  • Password policies and MFA requirements

2. Change Management

  • Formal change request and approval process
  • Development/test/production environment separation
  • Code review requirements
  • Testing and validation procedures
  • Emergency change procedures
  • Change documentation and audit trails

3. Computer Operations

  • Job scheduling and monitoring
  • Backup and recovery procedures
  • Incident management
  • Problem management
  • Service level management
  • Capacity and performance monitoring

4. IT Security

  • Firewall and network security
  • Antivirus and malware protection
  • Intrusion detection/prevention
  • Vulnerability management
  • Security monitoring and incident response
  • Data encryption

5. System Development

  • Systems development lifecycle (SDLC) methodology
  • Requirements documentation
  • Design specifications
  • Testing protocols
  • Implementation standards
  • Post-implementation reviews

SOX-Relevant Financial Systems

Common In-Scope Systems:

  • General ledger (GL)
  • Accounts payable (AP)
  • Accounts receivable (AR)
  • Fixed assets
  • Payroll
  • Revenue recognition
  • Financial consolidation
  • Financial reporting and analytics
  • Supporting databases and infrastructure

Our SOX IT Services

SOX IT Readiness Assessment

Evaluate current ITGC maturity and identify gaps before your auditors do.

ITGC Framework Implementation

Design and implement controls that satisfy auditor requirements while remaining practical and sustainable.

SOX IT Documentation

Create auditor-ready documentation:

  • IT control narratives
  • Process flowcharts
  • System descriptions
  • Risk and control matrices (RACM)
  • Test scripts and procedures

Control Testing Support

  • Facilitate auditor walkthroughs
  • Execute control tests
  • Document test results
  • Remediate deficiencies

Segregation of Duties Analysis

  • Map user access to financial systems
  • Identify SOD conflicts
  • Implement compensating controls
  • Establish access certification process

Continuous Controls Monitoring

Automate evidence collection and control monitoring to reduce manual effort and ensure ongoing compliance.

SOX IT Audit Timeline

Q1 (January-March)

  • Update risk assessment
  • Review and update IT control documentation
  • Address prior year audit findings

Q2 (April-June)

  • Management testing of ITGCs
  • Remediate any deficiencies
  • Document evidence for annual audit

Q3 (July-September)

  • Internal audit reviews
  • External auditor interim testing
  • Address any issues identified

Q4 (October-December)

  • External auditor year-end testing
  • Final remediation of any findings
  • Management assertions
  • Auditor opinions

Common SOX IT Challenges

Challenge: Excessive manual evidence collection Solution: Automated monitoring and evidence aggregation

Challenge: Auditor interpretation differences Solution: Pre-audit alignment with audit firm on control design and testing approach

Challenge: Control design vs. operating effectiveness Solution: Continuous monitoring throughout the year, not just at audit time

Challenge: Resource constraints Solution: Risk-based approach focusing on key controls and automation

SOX for Different Company Sizes

Accelerated Filers (>$700M market cap)

  • Full Section 404(b) requirements
  • External auditor attestation
  • More stringent timelines

Non-Accelerated Filers

  • Section 404(a) only (management assessment)
  • No external auditor attestation
  • More flexible approach possible

Newly Public Companies

  • Phased implementation allowed
  • Use emerging growth company (EGC) provisions if applicable
  • Build scalable controls from the start

Get SOX IT Compliant

Need SOX IT Support?

Schedule a SOX IT readiness assessment. We'll evaluate your IT general controls, identify gaps, and create a roadmap to pass your auditors' review.

Schedule Assessment Email SOX Team

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