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Sarbanes-Oxley Act (SOX) Compliance

Approach

The Sarbanes-Oxley Act of 2002 (SOX) was passed by Congress in the wake of the dot-com crash and accounting scandals at Enron, WorldCom and others. Meant to strengthen corporate governance and rebuild investor confidence, it put in place strict reforms to improve financial disclosures from public corporations. The legislation includes a section (SOX 404) that requires auditors of publicly held companies to report on and attest to management’s assessment of internal controls on financial reporting.

For years, SOX compliance was seen as routine. Assess risks, define controls, test controls.  Wash, rinse, repeat. Then in 2013, the Public Company Accounting Oversight Board (PCAOB) published Staff Alert 11 to make auditors aware of the high number of deficiencies the PCAOB was seeing related to audits of internal controls over financial reporting.

In the wake of Staff Alert 11, companies have been challenged to go back to the drawing board, continually assess risks within their environment, and understand whether or not controls are truly designed and operating at a level that mitigates the risk of a material misstatement. Accomplishing this requires a shift in both culture and focus.

Armanino has extensive experience helping clients make this shift. We have developed what is arguably the industry's most comprehensive yet cost-effective approach to ensuring that your internal controls related to financial reporting comply with all aspects of the Sarbanes-Oxley Act.

What makes our SOX compliance methodology so successful? It is built on three key attributes: 

Experience: Years of experience helping a wide range of companies has taught us that unfocused interpretation and broad application of SOX is costly, arduous and frustrating to management, shareholders and regulators. Too many companies unilaterally document and test all controls, even though this is rarely necessary.

Coordination and collaboration: Armanino's approach is different. We recognize that we serve a unique role in managing both management’s activities and the activities of external auditors. Our Sarbanes-Oxley audit methodology includes a strong focus on project management that fosters collaboration with all parties.  This helps to provide assurance that all parties remain aligned, are aware of emerging trends and issues, and have a clear line of sight to the resolution steps needed to tackle these issues.

Continuous improvement: We view continuous improvement as a strategic imperative.  When you don’t strive to improve across all aspects of your methodology, you become complacent, and that is when SOX compliance risks get missed. Throughout our project engagements, we work with stakeholders to assess the current processes (both management’s and ours), as well as enabling technologies, to determine where updates can and should be made.  This hyper-focus on improvement helps us stay one step ahead and ensure that your risks are fully mitigated and your operations are as effective as possible.

Resources

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