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Navigating SOX Compliance: Key Steps to Restarting Your Readiness Journey

Navigating SOX Compliance: Key Steps to Restarting Your Readiness Journey, Frazier & Deeter

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Restarting Your SOX Readiness Project

The IPO market remained relatively quiet in 2024, with many companies delaying their plans in response to economic uncertainty. However, as market conditions improve, a rebound is anticipated in 2025, with a backlog of over 350 companies preparing to go public within the next 24 months.

At Frazier & Deeter, we work closely with companies to navigate the complexities of SOX compliance. As businesses restart their SOX readiness projects, our team has identified key areas of focus to drive a structured and effective approach.

Structured Approach

A well-structured compliance program is fundamental to SOX readiness. Consider these key steps:

  • Build a team with diverse skillsets from various areas of the business. Look into outside resources if needed.
  • Be thoughtful with your front-end planning and seek input from your external audit partner and stakeholders.
  • Create testing templates that can be leveraged across your program and ensure they are in line with your external audit partner’s expectation.
  • Track results and form a detailed plan for remediation efforts that include process owner accountability and due dates.

Risk Assessment & Scoping

Reviewing your risk assessment and scoping documents are essential as the economic environment continues to evolve.  Some items to consider are:

  • Assess micro and macro-economic changes and how they impact your business. Determine a strategy to effectively mitigate newly identified risks according to your risk tolerance.
  • Review your organization’s technology systems, applications and tools. Understand their functionality and determine relevance for SOX scoping.
  • Revisit your organization’s most recent Enterprise Risk Assessment to ensure that relevant financial reporting risks are addressed within your SOX program.
  • During your financial assessment, it’s helpful to leverage prior year actuals, current year budget and current year adjusted forecasts, to assist in reducing your risk exposure.

Program Governance

Program Governance includes executive support, transparency, accountability and project management. Each of these are essential to promote an impactful control environment:

  • Key stakeholder support of the program provides the necessary ‘tone at the top’ to help drive the program.
  • Establish clear ownership responsibilities to foster accountability and create team alignment on program objectives.
  • Form a steering committee and meet regularly to keep organizational leaders informed of program milestones, key decision points and maintain tone at the top.

Communication

Communication is more than an email announcing a change within an organization. A SOX program implementation requires ongoing bidirectional communications to keep the program on track:

  • Implement a structured change management protocol that includes comprehensive training and communication strategies.
  • Ensure timely reporting of testing results to stakeholders to facilitate prompt remediation.
  • Maintain ongoing dialogue with stakeholders to help ensure program alignment amongst leadership.

Education and Training

Ensuring that your team and stakeholders understand SOX requirements and how they impact your organization is essential to success. Some items to consider are:

  • Foster a culture of compliance by educating team members on the purpose and impact of SOX requirements. Effectiveness of a SOX compliance program is partially driven by the understanding of program requirements that the team members have.
  • Provide onboarding and refresher training to ensure both new and existing employees understand their responsibilities.
  • Implement a mechanism that captures trends and new guidance from authoritative sources, such as the PCAOB.

It’s a Journey, not a Destination

SOX compliance is not a one-time initiative — it is an ongoing process that, when approached thoughtfully, adds long-term value to the organization. A well- executed SOX program enhances operational efficiency, strengthens risk management and protects shareholder value.

Ready to restart your SOX journey? Frazier & Deeter can help you navigate the complexities. Contact us to get started.

Contributors

Ben Schubring, Advisory Director

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