If your circumstances change and you haven’t kept up with the evolving expectations, you might find yourself with a material weakness — or at best a year of excessive work, pain, and cost. Here are a few best practices to stay ahead of the curve.
Follow SEC announcements online throughout the year, but also know the cycle. The PCAOB inspects the firms each spring. Over the summer, the firms debrief, change their methodologies, and implement new training for their teams accordingly. They hit the ground running in the fall with new probing questions and new expectations. If you understand this cycle, you’ll know when to schedule an annual meeting with your audit partner to discuss what the firm learned from the inspections while it’s still fresh. Then, you’ll know what’s coming at you in the fall.
Track PCAOB reports, which drive constant change to audit methodologies, and track SEC speeches and studies, which create new focus areas. Look at where the auditors have spent their time, and where they haven’t. CAMs and cyber-related risks have been in in the appendices to their Audit Committee presentations for two years. When you see them putting these issues in their thought leadership, you know something new is coming.
Connect with others who share the same audit firm, or even better, the same audit partner. Find peers in the same industry with a similar size and complexity, and the same ERP system. Swap stories and learn from each other to put yourself in the position to tell your auditor that, for example, your counterpart at a company audited by the same firm didn’t have to pull Cyber into scope. There’s never been a better time to have a network to help stay informed.
If you keep up with the guidance and evolving audit trends you will be able to focus your assessment of controls in key areas, which will let your CFO and controller see more value in your audit while also helping to keep your auditor’s fees in check. You’ll create a more efficient and effective control environment focused on the things that matter. By staying on top of the changes and basing your actions on the guidance, you’ll stay ahead of new developments — and everybody wins.
Want to hear more? Watch the full on-demand recording to hear Rob Frattasio go deeper into new and upcoming focus areas in SOX being driven by the SEC and PCAOB.