SOX Readiness & Compliance Services

SOX Section 404 requires management assessment of internal controls over financial reporting (ICFR), supported by external auditor attestation. This requirement creates comprehensive work beginning with identification of significant accounts and disclosures in financial statements. Significant accounts are those where reasonable possibility of material misstatement exists, considering size, composition, and transaction volume. For each significant account, companies must identify relevant financial statement assertions (existence, completeness, accuracy, valuation, presentation, and disclosure) that could be misstated.

Our SOX 404 assessment services implement the COSO internal control framework—Control Environment, Risk Assessment, Control Activities, Information and Communication, and Monitoring—as the foundation for compliance. We document financial reporting processes using process narratives describing how transactions flow from initiation through financial statement reporting, flowcharts visually depicting processes with control points identified, and risk and control matrices (RCMs) linking identified risks to control objectives and control activities.

Control testing requires sufficient evidence to support operating effectiveness assessments, typically testing throughout the year rather than at year-end only. We design test procedures with appropriate sampling methodologies considering control frequency and automation. Manual controls require more extensive testing than automated controls. We evaluate identified control deficiencies using SOX criteria—significant deficiencies versus material weaknesses—and implement remediation for issues that create control weaknesses. Our assessment creates defensible management assessment supported by comprehensive documentation and testing evidence.

SOX documentation requirements are extensive and specific, demanding standardized formats that satisfy both management assessment needs and auditor expectations. Process narratives describe financial reporting processes in detail, explaining how transactions originate, are processed, approved, recorded, and reported. These narratives identify control points throughout processes where control activities prevent or detect errors or fraud. Flowcharts provide visual representations of processes with swim lanes showing responsibilities across departments, making control points visible and process understanding easier.

Risk and control matrices (RCMs) represent the core SOX documentation, linking significant accounts to relevant assertions, identified risks, control objectives, and control activities. RCMs create the direct link between risks and controls that auditors examine during attestation. Our documentation framework implements consistent templates and formats across all processes, creating organized documentation repositories that facilitate efficient testing and auditor review.

We implement control frameworks appropriate to company size and complexity. Smaller companies may implement simpler frameworks with appropriate controls, while larger organizations need more sophisticated frameworks with detailed segregation of duties, automated controls, and formal governance. Our approach scales appropriately, ensuring SOX compliance without creating excessive bureaucracy that hinders operations. We also help companies balance SOX requirements with practical business needs, creating efficient processes that satisfy compliance while supporting operational objectives.

Control testing provides the evidence supporting management's internal control assessment. SOX requires testing of operating effectiveness—not just design—meaning controls must actually function as intended. Our testing approach considers control frequency and automation. Automated controls (system controls that operate consistently) require less testing than manual controls. Controls operating continuously require less testing than periodic controls. We design sampling strategies appropriate to each control's characteristics.

Testing procedures include inspection of documentation (approvals, reconciliations, reports), observation of control performance, confirmation with independent third parties, and recalculation of control results. We document test results comprehensively, creating evidence trails that support assessment conclusions. When testing identifies control failures or deficiencies, we evaluate severity using SOX criteria—significant deficiencies (severe enough that a reasonable person would be concerned about management's ability to record, process, summarize, and report financial data) versus material weaknesses (more severe, with reasonable possibility of material misstatement not prevented or detected).

Deficiency assessment drives remediation priorities. Material weaknesses require both management auditor communication and public disclosure in annual reports, creating significant stakes for accurate assessment. Our testing methodology helps identify deficiencies early, allowing remediation before year-end assessment. We implement corrective actions including process redesign, control enhancements, personnel training, or system improvements. Ongoing monitoring ensures remediated controls operate effectively. Through systematic testing and remediation, we help companies achieve and maintain effective internal control environments.

SOX Section 302 requires CEO and CFO certification of financial statements, creating personal liability for executives and demanding rigorous financial statement preparation and review processes. Certificates must certify that the financial statements and other financial information fairly present the company's financial condition, operations, and cash flows, that responsible officers have designed internal controls to ensure material information is made known, and that executives have evaluated controls within 90 days prior to report and disclosed any significant deficiencies or material weaknesses.

Our certification preparation services establish robust financial statement closing processes including quarterly close checklists, detailed analytical review procedures, variance analysis requiring explanation and documentation, and formal sign-off procedures at appropriate management levels. We implement disclosure committee processes to review and approve financial statements, MD&A (Management Discussion and Analysis) narratives, and other public disclosures. These processes create the documentation and review supporting CEO/CFO certification.

We prepare executives for certification responsibilities, explaining personal liability, certification requirements, and the importance of challenging subordinates when concerns arise. Our certification processes create defensible positions where executives can certify with confidence, supported by thorough review, comprehensive documentation, and effective controls. We also establish whistleblower hotlines and complaint procedures that SOX requires, creating channels for reporting concerns about accounting or auditing matters directly to audit committees.

Multi-location and cross-border organizations face additional SOX complexity requiring materiality assessment to determine which locations or business units fall within SOX scope. Materiality considers revenue, assets, transaction volume, and specific risk factors. A Canadian subsidiary of a US parent company may be in scope if material. A Canadian company listing on US exchanges must include all material locations regardless of country. Our multi-location SOX services conduct comprehensive scoping assessments identifying all in-scope locations.

Cross-border compliance presents unique challenges including different accounting practices between Canadian GAAP/IFRS and US GAAP, different business practices and cultural norms affecting controls, potential language barriers for documentation and testing, and logistical challenges for on-site testing. Our cross-border expertise helps companies navigate these challenges, implementing standardized control frameworks where appropriate while accommodating local requirements.

We implement common controls across locations to create efficiency—standardized processes for accounts payable, revenue recognition, payroll, and other significant processes. However, we recognize when location-specific customization is necessary for local compliance or business requirements. Our balanced approach creates SOX compliance that scales across organizational complexity while maintaining required rigor. We also help companies with foreign private issuer (FPI) status determinations, as Canadian companies may have transitional exemptions or modified requirements in certain circumstances.

SOX compliance creates ongoing annual requirements for management assessment and auditor attestation, but successful compliance demands continuous monitoring throughout the year rather than year-end scrambles. Our ongoing compliance services include quarterly monitoring of control changes, identification of new processes or changed processes, documentation updates reflecting changes, testing of new or modified controls, and continuous monitoring through data analytics.

We implement continuous control monitoring using Key Control Indicators (KCIs) that measure control effectiveness quantitatively—journal entry error rates, reconciliation completion timeliness, override rates for automated controls, and exception report volumes. These metrics provide early warning of control deterioration, enabling proactive remediation before controls fail. We establish self-assessment processes where business process owners evaluate their controls quarterly using standardized checklists, distributing compliance responsibility while maintaining oversight.

Annual compliance cycles include scoping updates reflecting business changes, risk assessment updates for new products, services, or systems, documentation updates, full-year testing including interim and final period testing, deficiency assessment and remediation, and management assessment conclusion. Our ongoing services manage these cycles systematically, creating repeatable processes that become efficient over time. We also coordinate with external auditors throughout their testing, responding to inquiries, providing documentation, and facilitating efficient attestation.