UK SOX (Sarbanes Oxley) impact on business
Regularity compliance has always been a major priority for running a business in the UK. Making executives at top listed companies personally accountable for the accuracy of financial statements would drive better company behaviour and ensure effective prevention against fraudulent activities.
In 2018, the UK government-commissioned review stated that there was a discussion taking place regarding the introduction of a Sarbanes-Oxley style regime in the UK.
In the last few years, there has been a debate about UK Sarbanes Oxley (SOX) potentially becoming the new reality. In the Brydon report, Sir John Kingman recommended that in order to strengthen the UK audit framework, the UK should also have their own SOX Act.
Since the introduction of the Sarbanes–Oxley Act of 2002, a number of global organisations have strengthened their internal IT and Business controls and ensured that they detect and remediate any risks of material mis-statement to their financial statements.
SOX requires top officials to attest that the internal controls of their company are robust enough to ensure all financial statement are reliable and accurate. These assertions would be verified by an external auditor.
Regardless of legislation, it is highly recommended that Businesses across the UK consider implementing SOX type frameworks. It will help them reap the benefits of better risk and control management, process improvements and significant savings that SOX reviews can identify. In many cases ZR Consultants have identified savings that significantly exceed the cost of implementing SOX, these have included revenue leakages, inaccuracies in complex models etc.
Sarbanes-Oxley provides assurance over financial statements by reviewing all the processes ensuring there are no material misstatements in the financial records of an organisation. Such a framework would mark a significant toughening up of the governance rules by making top executives personally liable for breaches.
Compliance with section 404 of the Sarbanes-Oxley Act 2002 implies that businesses now have to document and attest to their operational effectiveness. This includes reviewing all processes that have a material impact on their financial statements.
The UK has increasingly strengthened its governance to tighten the reporting requirements under the Companies Act 2006. The European Union has also introduced a system that aims to increase the level of confidence and transparency in corporate governance. This results in enhanced investors’ protection for employees, and the public against corporate theft, fraud, mismanagement, and cheating.
Implementation of such a regime would raise the standards of corporate governance, financial management, financial accounting, risk management and accountability within the organisations.
They will also be answerable to the auditors, and to make sure that everything goes smoothly, ZR consultants will ensure that the process is as efficient as possible. We focus on addressing the numerous cultural challenges that organisations face in terms of auditing. Here is what you need to get ready:
- SOX requires a considerable investment of time and robust planning with clearly articulated milestones to achieve any success. So, the earlier you start, the more issues you will be able to address during testing.
- Secondly, you need to make sure that staff involved in SOX have clearly defined roles. For instance, assigning the roles of process owners, control owners, and control operators.
- Third, you need to have a clear structure that outlines how you will be monitoring progress. It is recommended you set up a governance forum where risks and issues can be escalated under the attendance of key decision-makers.
Why ZR Consultants?
At ZR Consultants, we take pride in delivering only high-quality outputs to organisations within their budget and deadlines. We ensure your expectations are managed effectively, and your business has a strong relationship with both internal and external stakeholders.
For 15 years, ZR Consultants have been delivering SOX, and our performance has always been appraised and relied upon by the Big 4. Accredited with PRINCE2 and ACCA/ICAEW qualification, every member of our team has IT and Business SOX experience.
Our consultants are available to help you regarding any queries you might have and address the challenges you face.
We are equipped with the latest technology and offer you support safely, effectively, and remotely.