SOX Compliance Checklist & Tips to Prepare

Whether it’s your first time establishing SOX compliance or you’ve been through the process many times before, integrating internal controls that adhere to today’s laws and regulations, drive operational efficiency and safeguard your business from risk is no easy feat.

As experts in helping businesses successfully navigate the complexities of SOX, we’ve outlined some simple yet effective steps to ensuring SOX compliance.

What is SOX Compliance?

SOX compliance is the process of implementing accurate, reliable and auditable procedures and internal controls that align with the rules and regulations established by the Sarbanes-Oxley Act of 2002.

This includes developing, maintaining and optimizing financial and technological processes across your organization to ensure adherence to today’s standards and best practices while mitigating the potential for risk to occur.

For a comprehensive yet easy-to-understand SOX compliance checklist, download our whitepaper.

SOX Compliance Checklist, Implementation Steps and Tips for Success

1. Develop a SOX compliance plan or roadmap
2. Ensure availability and accuracy of SOX documentation and conduct a SOX walkthrough
3. Conduct a SOX Test of Design and SOX Test of Operating Effectiveness
4. Conduct SOX remediation to establish proper internal controls

1. Develop a SOX compliance plan or roadmap

Proper SOX planning is essential, as it sets the stage for all the policies, procedures and internal controls you’ll need to implement to ensure SOX compliance.

This vital step involves conducting a company-wide assessment of your people, processes and systems to identify risks, vulnerabilities and areas for improvement so you can begin to piece together a plan of corrective action.

SOX compliance checklist for planning:

1. Perform an annual SOX risk assessment by partnering with an internal audit consultant or outsourced risk consultant or team
2. Assess materiality thresholds and accounts
3. Update business processes to adhere to new changes
4. Identify controls for new processes
5. Update your risk control matrix

2. Ensure availability and accuracy of SOX documentation and conduct a SOX walkthrough

During a SOX walkthrough, an independent auditor will evaluate the effectiveness and design of your internal controls to ensure SOX compliance.

This activity involves walking your auditor through the flow of a transaction as it progresses throughout your systems and financial reports – which also requires having the proper documentation in place ahead of time.

Documentation of internal controls and other SOX-related activities is key for quickly and successfully addressing any auditor questions or concerns that arise during a SOX walkthrough – and establishing procedures for next year’s audit to save time down the line.

In addition, if there are any gaps within your current processes that call for additional rework, a SOX walkthrough will help you identify exactly what needs to be done to ensure SOX compliance.

SOX compliance checklist for documentation and walkthroughs:

1. Ensure availability and accuracy of internal controls and other SOX-related documentation in preparation for auditor review
2. Schedule and participate in SOX walkthroughs with auditors
3. Provide support to parties updating documentation to integrate any necessary changes identified by the auditor (e.g. narratives, flowcharts and more)
4. Evaluate segregation of duties (SOD) and identify compensating controls

3. Conduct a SOX Test of Design and SOX Test of Operating Effectiveness

SOX testing verifies that all internal controls are 1) successfully implemented, documented and compliant, and 2) can be effectively utilized by employees and stakeholders to meet business goals.

A SOX Test of Design involves assess whether or not the internal controls are designed appropriately to ensure adequate review, completeness and accuracy – while also keeping efficiency and functionality top of mind.

A SOX Test of Operating Effectiveness provides insight into whether or not a control has operated consistently over a set period of time (usually 12 months, signaling the need to begin this process as soon as possible).

SOX testing ensures that internal controls are not only operating effectively your organization but also provide tangible value for your company and employees while helping you proactively mitigate risk.

SOX compliance checklist for testing:

1. Respond to population requests from internal and external auditors
2. Respond to sample requests as needed
3. Respond to follow ups for Test of Design or Test of Operating Effectiveness
4. Create a Management Action Plan for logged issues or exceptions with assistance from internal audit findings

4. Conduct SOX remediation to establish proper internal controls

SOX remediation is the process of correcting financial and operational issues, vulnerabilities or areas of improvement that were previously identified by an auditor or SOX testing procedures.

Whether you need to refine internal controls, establish system controls or optimize financial reporting processes, remediation is an essential step to mitigating risk and ensuring SOX compliance.

SOX compliance checklist for remediation:

1. Verify issue logs for outstanding issues
2. Establish and approve remediation plans
3. Implement remediation measures

Final Thoughts on How to Ensure SOX Compliance

The SOX compliance process can be complex, challenging and time-consuming for businesses at any stage of growth – whether it’s your first audit, the subsequent year you need to ensure compliance or the ongoing annual SOX compliance audit.

Rather than adding to your current team’s roles and responsibilities and running into timeline delays, experiencing operational inefficiency or accruing costly fines as a result of non-compliance, it’s much more beneficial to turn to a trusted partner who already has the necessary expertise to ensure SOX compliance and drive company-wide success.

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Insights By

Jeanne Metz

Director, Risk & Compliance

Jeanne is an accounting professional with over 25 years of experience leading teams to achieve value-added solutions. She has managed

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