How Automation Can Improve Your SOX and Internal Control Compliance Efforts

How Automation Can Improve Your SOX and Internal Control Compliance Efforts

by Ted Flom, Bianca Sarrach, Darren Johnson
October 07, 2022

While Sarbanes-Oxley (SOX) is a household name in board meetings, SOX compliance remains difficult or at least needlessly expensive for many companies. Labor market challenges make it difficult for businesses to attract and retain the skilled people needed to build effective SOX and internal control programs. Typically, those same highly sought-after people often spend valuable time performing menial tasks such as manually cleansing and reviewing data — further hindering compliance efforts. Coupled with increasing regulatory requirements, many companies feel paralyzed when trying to update their approach to complex internal compliance efforts and often end up simply maintaining the status quo.

By incorporating automation and data analytic tools into your SOX and internal control compliance strategy, your company can take small but impactful steps to reduce personnel costs, improve the quality of your data and empower your people to contribute their strategic insights to your company.

Reduce SOX and Internal Audit Personnel Costs

Internal compliance efforts are more expensive than ever, mainly because the people who perform these functions demand greater wages and are harder to find. Rising personnel costs are a major driver behind companies looking for ways to automate their SOX compliance efforts.

Through automation tools, such as robotic process automation (RPA), your organization can do more with less. RPA functions like a digital worker that can perform repetitive, menial tasks on demand. So, instead of having your compliance team spend a week out of every month reconciling data from multiple sources, your RPA bot can accomplish the same feat in a fraction of the time. The bot helps reduce the burden of manual work on your top talent and enables them to focus on addressing more complex elements of your organization.

Additionally, as your company matures and data becomes increasingly intertwined with your success, utilizing technology that can automatically collect and analyze data can help make sampling and other testing more cost and time efficient. An individual can only manually review so many transactions and identifying the possible exceptions that put your program at risk often requires hiring additional people. With automation and analytic tools, your team is able to analyze larger datasets, identify outliers or irregular data patterns and focus on inspecting fewer transactions, thus achieving the same goals more quickly and with a leaner staff.

Leverage More Accurate and Insightful Data

To leverage these tools in your approach and provide insights that lead to a stronger control environment, your compliance team needs data they can trust and that provides a holistic view of the organization. Your company likely collects immense amounts of data within your systems that provides information on the operation of controls. Often this data resides in multiple platforms or may not have a high degree of consistency and integrity, which can lead to the same data appearing in different fields, formats, characters, etc.

Resolving these discrepancies can be time-consuming and increase in frequency when multiple people interact with your disparate systems. The cleanliness of your data (or lack thereof) can cause downstream issues that may impact your ability to leverage these tools or jeopardize your company’s compliance. Automation can also help reconcile and cleanse your data so that corrupted, incorrectly formatted, or duplicate data can be avoided. Automation could help you unify your data and help ensure its accuracy – making it more useful for analysis and enabling you to monitor the effectiveness of your controls.

If you set up your automation tools correctly, they can provide real-time feedback to your control owners allowing them to build a proactive control program. With more accurate and comprehensive data, your control owners can pinpoint recurring errors and dive into the root cause of problems instead of just correcting the exception and moving on to the next discrepancy.

Focus on Higher Value and More Exciting Work

Your compliance teams should be able to devote most of their time to strategic projects that boost the organization’s long-term success. Time spent inputting data and going through spreadsheets is time they can’t spend delivering insights to stakeholders.

Automation allows your team to leverage your company’s data to establish relevant metrics and dashboards, reducing the need for manual intervention. As a result, they can be freed up to perform more impactful analysis that digs deeper to identify trends, outliers or abnormal occurrences in your environment.

Adopting automation can also improve employee retention. The current labor market has made it harder to attract quality employees, so keeping the ones you already have is critical. Tasking your auditors with more interesting and value-add work — such as data analysis, identifying key insights and helping build a stronger control environment — will likely improve their workplace engagement and result in more meaningful contributions to your business.

Automation Is Here to Stay

Automation and analytics are foundational to the future of the audit industry. Incorporating this technology into your current SOX and internal control programs can play a key role in helping you improve your business’s operations and growth. Whether your goal is to reduce the cost of your compliance processes, enhance the data you use to make those efforts more effective or empower your compliance team to spend more time on higher value activities — you can realize the multiple benefits of automation throughout your organization.

Contact our SOX and internal audit experts to learn how automation could improve your compliance program.

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