2/20/24, 4:19 PM SOX Compliance Checklist Deloitte | ChecklistComplete

SOX Compliance Checklist Deloitte

SOX compliance is an important aspect of ensuring financial
reporting accuracy and accountability. The Sarbanes-Oxley Act
(SOX) of 2002 serves to protect investors by requiring
companies to accurately report their financial information and
maintain internal controls over their financial reporting process.

Develop an internal control framework.

Assess the design and operating effectiveness of controls.

Evaluate information technology general controls.

Implement a process for identifying and assessing fraud risk.

Create appropriate segregation of duties within financial reporting.

Document internal control deficiencies and corrective actions

taken.

Establish processes to ensure accurate financial disclosure.

Develop procedures to monitor compliance with laws, regulations,

contracts and agreements.

Compare quarterly results against prior periods’ reports.

Identify potential non-compliance issues.

Ensure management declaration of financial statements.

Conduct an independent testing program for internal controls.

Develop and implement a process for continual improvement in

internal controls.

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Establish processes to detect material misstatement from external

sources.

Monitor SOX-related audit costs and other compliance activities.

Develop policies and procedures to ensure accurate accounting

records are maintained.

Details for SOX Compliance Checklist Deloitte

1. Develop an internal control framework:
An internal control framework is a set of processes, policies and
procedures designed to protect corporate assets, ensure accurate
financial information and promote operational efficiency. This
framework should be implemented company-wide and include the
assignment of roles and responsibilities, segregation of duties, risk
monitoring & management, communication of changes and
corrective actions, and the documentation of key processes.

2. Assess the design and operating effectiveness of

controls
An evaluation of internal controls should be performed to ensure that
they are adequately designed and operate effectively. This process
should involve assessing the risks associated with each control,
determining how well the control mitigates those risks, and testing
controls to ensure that they meet requirements. It is important to note
that this assessment should take place on a regular basis in order to
ensure its accuracy over time.

3. Evaluate information technology general controls

Information technology (IT) general controls are necessary for
ensuring financial statement accuracy as IT systems are used
extensively in many corporate accounting processes. These include
system change management, access security, application
development, and system monitoring control activities. It is important
to assess the design of these controls and their operating
effectiveness in order to address IT risks that could lead to financial
statement misstatement.

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4. Implement a process for identifying and assessing fraud

risk
Fraudulent activity can have a negative effect on corporate finances
and reputation, so it is important to be proactive in detecting and
preventing it. This means developing procedures to identify, assess,
monitor and mitigate fraud risk. Procedures should include
documenting how potential frauds are identified, an assessment of
the likelihood of occurrence, communication with relevant
stakeholders, implementation of mitigating actions if necessary, and
management reporting on significant findings.

5. Create appropriate segregation of duties within financial

reporting
Segregation of duties is an important internal control that helps to
protect against fraud and error. This involves assigning separate tasks
across different individuals so that one person does not have
complete control over a process. The segregation of duties should be
designed based on the risk exposure associated with each task and
the competencies of personnel responsible for the task.

6. Document internal control deficiencies and corrective

actions taken
When assessing internal controls, it is important to document
instances of control deficiency and implement corrective action where
necessary. This includes identifying the issue, outlining proposed
corrective action, documenting implementation of these corrective
actions, and tracking their effectiveness over time.

7. Establish processes to ensure accurate financial

disclosure
Accurate financial disclosure is essential for ensuring transparency in
corporate financial reporting. This includes implementing processes
to ensure that accurate, complete and up-to-date information is
included in financial statements. Procedures should include
establishing a review process for financial statements prior to their
release, managing changes in accounting principles over time, and
verifying the accuracy of disclosures with supporting documentation.

8. Develop procedures to monitor compliance with laws,

regulations, contracts and agreements
It is essential that organizations develop processes to ensure
compliance with all applicable laws, regulations, contracts and
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agreements. This should include establishing procedures for

monitoring compliance on an ongoing basis, developing policies and
procedures where necessary, communicating requirements to
personnel responsible for carrying out the activity, and reporting any
discrepancies or irregularities.

9. Compare quarterly results against prior periods’ reports

In order to ensure that financial statements are accurate, it is
important to review them on a regular basis. This includes comparing
quarterly results against prior periods’ reports in order to identify any
discrepancies or changes in trends. Additionally, organizations should
perform analytical procedures on the data to better understand the
underlying drivers of financial performance.

10. Identify potential non-compliance issues

This includes documenting processes for identifying non-compliance
issues, assessing their severity and determining the appropriate
corrective action. Procedures should also include reporting any
significant findings to management or boards of directors as
necessary.

11. Ensure management declaration of financial statements

Organizations should implement processes to ensure that
management has made an appropriate declaration of the financial
statements. This includes obtaining a written statement from
management confirming their responsibility for the accuracy and
completeness of the financial information presented in the report.

12. Conduct an independent testing program for internal

controls
An independent testing program is important to assess the
effectiveness of internal controls. This should include performing
tests and reviews of processes, identifying potential control
deficiencies and implementing corrective actions where necessary.
Additionally, organizations should consider engaging an external
auditor to review the design and operation of internal controls.

13. Develop and implement a process for continual

improvement in internal controls
In order to ensure the effectiveness of internal controls, organizations
should establish a process for continual improvement. This can
include conducting risk assessments on an ongoing basis, identifying
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areas of potential control weaknesses and implementing corrective

actions where necessary. Organizations should also review their
internal controls annually and make any necessary changes in
response to changes in the business environment or new regulations.

14. Establish processes to detect material misstatement

from external sources
Organizations should establish processes to detect material
misstatement from external sources, such as customers, vendors, and
other third parties. This can include performing independent reviews
of the information provided by these entities, conducting background
checks on new suppliers, and verifying the accuracy of billing
statements. Additionally, organizations should develop procedures for
responding to any discrepancies or irregularities that are identified.

15. Monitor SOX-related audit costs and other compliance

activities
This can include conducting periodic reviews of all related expenses
and reporting any significant changes or irregularities to management
or the board of directors. Additionally, organizations should consider
developing internal guidelines and control mechanisms for
monitoring compliance costs and ensuring cost effectiveness.

16. Develop policies and procedures to ensure accurate

accounting records are maintained
Organizations should develop policies and procedures to ensure that
accurate accounting records are maintained. This can include
establishing processes for recording and maintaining all financial
transactions, implementing internal controls over access and use of
financial information, and ensuring the accuracy of all data reported
in the company’s financial statements. Additionally, organizations
should consider developing a system of review to ensure that
accounting records are properly reviewed on a regular basis.

FAQ for SOX Compliance Checklist Deloitte

1. How is SOX compliance achieved?

SOX compliance is achieved by implementing effective internal
controls and processes, including the development of a control

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environment and risk assessment to identify potential threats,

designing appropriate financial reporting procedures, establishing an
independent testing program for internal controls, developing policies
and procedures to ensure the accuracy of accounting records are
maintained, monitoring SOX-related audit costs and other compliance
activities, and conducting regular reviews of financial statements.

2. What is required for SOX compliance?

For SOX compliance organizations must establish effective internal
controls and processes that include: developing a control environment
and risk assessments; designing appropriate procedures for financial
reporting; conducting independent testing programs for internal
controls; establishing processes to detect material misstatement
from external sources; monitoring SOX-related audit costs and other
compliance activities; and developing policies and procedures to
ensure accurate accounting records are maintained.

3. What is the purpose of SOX compliance?

The purpose of SOX compliance is to protect shareholders and
investors by ensuring the accuracy and reliability of financial
information used for decision-making. The goal of SOX compliance is
to reduce corporate fraud by requiring companies to maintain proper
internal controls, provide timely disclosure of material information,
prevent insider trading, and ensure audit committees are properly
functioning.

4. How often should an organization review its SOX

compliance?
Organizations should review their SOX compliance on a regular basis
to ensure that all processes remain effective and up-to-date with any
changes in regulations or business environment. It is also important
to conduct periodic reviews of all related expenses and report any
significant changes or irregularities to management or the board of
directors.

In Summary
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A checklist for SOX compliance from Deloitte can be a valuable tool for
companies looking to comply with the requirements of Sarbanes-
Oxley (SOX) Act. The checklist can help organizations ensure they have
effective internal controls and processes in place, including
developing a control environment and risk assessments; designing
appropriate procedures for financial reporting; conducting
independent testing of internal controls; establishing processes to
detect material misstatement from external sources; monitoring SOX-
related audit costs and other compliance activities; and developing
policies and procedures to ensure accurate accounting records are
maintained. Organizations should review their SOX compliance on a
regular basis to ensure all processes remain effective and up-to-date
with any changes in regulations or business environment.
Additionally, organizations should consider developing a system of
review to ensure that accounting records are properly reviewed on a
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