Remediating IT SOX deficiencies

Keith Urtel
Kim Garcia
February 27, 2024

The Sarbanes-Oxley Act (SOX) emphasizes the accuracy and reliability of financial reporting, with IT General Controls (ITGC) safeguarding the integrity of financial data. However, recurring ITGC deficiencies (whether control deficiencies, significant deficiencies, or material weaknesses) continue to challenge companies. Addressing these deficiencies is crucial for fulfilling regulatory obligations and reinforcing investor confidence.

Common trends in ITGC SOX deficiencies

Deficiencies in ITGCs reflect broader trends in IT and financial governance. These include:

  • Inadequate access controls: failure to adequately restrict financial system access leads to unauthorized data manipulation.
  • Deficient change management: struggles with managing IT system changes, which can impact financial data integrity.
  • Poor segregation of duties: inadequate segregation leads to conflicts of interest and increased risk of fraud.
  • Increased reliance on third parties: inadequate identification and monitoring of controls performed by significant third-party service providers.
  • Lack of regular security reviews and audits: neglect of regular reviews to identify and address vulnerabilities.
  • Ineffective incident response and recovery: lack of robust plans and remediation of IT security incidents can directly impact financial reporting.

Strategies for remediation

In determining the significance of IT control deficiencies, the following factors are considered:  complexity and diversity of operations, systems and processes, pervasiveness of the IT failure, susceptibility to fraud, and history of IT deficiencies.  In addition, the impact on programmed/application controls or IT-dependent manual controls and effectiveness of complementary controls as well as the likelihood that the IT control deficiency could result in a financial reporting misstatement is also assessed. IT deficiencies (especially material weaknesses) can take longer to remediate, with remediation of IT changes requiring more time to plan and implement.

In an era where technology and financial governance are increasingly intertwined, effectively remediating ITGC deficiencies, especially those following common trends, is critical. Organizations must adopt a proactive, informed approach to ITGC SOX compliance, fostering a culture of continuous improvement and vigilance.

Our team can help your company with its SOX objectives, from documenting to testing and remediation. Contact us to see how we can help.

Keith Urtel
Partner-in-Charge, Quality & Risk Management
kurtel@socorropartners.com
+1.954.599.4834
Kim Garcia
Advisory Partner & IT Risk Leader
kgarcia@socorropartners.com
+1.305.703.9836
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