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The SOX Efficiency Cycle: Minimizing Friction for Optimized Compliance

Internal Audit
Internal Controls
Risk Assessment
Risk Management
The SOX Efficiency Cycle: Minimizing Friction for Optimized Compliance
4 min read
Published: November 13, 2018
Last Updated: November 20, 2020

Everyone knows that practice makes perfect. Whether you're learning how to ride a bike, knit a sweater, or juggle chainsaws, it takes a while to get the hang of complicated processes. On the plus side, you're not starting from scratch with each new day. Every time you practice, you apply what you learned to the subsequent time.

The same applies to improving your SOX efficiency. The more you practice—and the more you plan—the smoother the process goes. When you take what you've learned and apply it to next year's compliance efforts, process improvement becomes cyclical, and teams can quickly pivot in a changing regulatory environment.

Here is a quick overview of the four-part cycle to improve your SOX compliance efficiency.

1. Plan ahead

In order to reach your goal, you need to have a clear idea of how to get there. More than that, you must have an articulate grasp of what efficient compliance is, along with where your team is and where you want to be.

Since the concept of efficiency varies from person to person and team to team, the definition most applicable to your organization must be established. Not only will this provide your team a line in the sand metric, but it will also be easier to prove the progress of your team in months and years to come.

Four benchmarking questions to ask yourself:

  1. What are the specific goals I have in mind for this year?
  2. What are the objectives I must meet, and what are the obstacles I anticipate running into?
  3. What are the items I must deliver, and when will they be due?
  4. Do we have the right resources and skill sets required to execute our plan?

2. Conduct the work

At this stage, you should have a working definition of what efficiency means for your team—what it is, what it isn't, and a rough idea of how to get there. To better set up your organization for success, make these definitions more actionable and specific through the assignation of qualitative and quantitative metrics.

A recent Forrester report describes that 74 percent of firms want to be data-driven, but less than a third can successfully connect analytics to action. Actionable insights appear to be the missing link for companies that want to drive business outcomes from their data.

To determine quantitative metrics, look back at past performance data:

  • How many control tests were scheduled?
  • How many were completed?
  • How was staff utilized?
  • What were the budgeted hours as compared to the actual hours?

For qualitative metrics, ask valued coworkers and key stakeholders probing questions:

  • What do clients and internal stakeholders think of your team’s performance?
  • Do they consider you and your team leaders in your role or order-takers?

3. Look at the results

To check the quality, effectiveness, and efficiency of your team’s work, SOX leaders should look at individual performance on an ongoing basis—not just an annual one. After all, it is easier and less problematic for leaders to reevaluate individual performance in small increments before it becomes a major issue.

Take a look back—both during and after the compliance process—at the articulated plan you've established. Ask these questions to see if you're on the right track:

  • How did the actual outcome compare to the outcome you planned and prepared for?
  • What, if any, were the differences?
  • How could your process be improved?

4. Act on what you've learned

You have some great tools at your disposal, including an agreed-upon definition of efficiency and effectiveness, metrics to back those definitions up, and more. It's time to put them all to use to improve your SOX efficiency and keep your team agile.

Take a step back and consider the following:

  • What did the results step tell you?
  • What metrics can you turn into actionable tactics?
  • Close the cycle—what can you learn from this year that you can apply to the next?

For the full detail on this cyclical plan for SOX efficiency and effectiveness, download our white paper, Maximizing SOX Efficiency and Effectiveness in Your Organization.

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