Internal Audit: Preparing for UK SOX

Richard Wilson October 22, 2021

UK SOX Compliance Tools & Software

To lower the cost of compliance and maximize the value of your Sarbanes-Oxley (SOX) resources you need to introduce software that will digitize and automate your Internal Audit Management program. Fortunately for the modern auditor, there is more technology and software available to us than what our U.S. counterparts had in 2002. SOX Compliance tools and software like AuditComply aim to free up time for your internal audit (IA) team to focus on more value-added activities such as increasing the quality of controls or strategic planning. The right solution will automate administrative tasks and provide actionable insights that encourage better visibility, engagement and results for your SOX program. Ultimately leading to less financial restatements, material weaknesses and a more risk-intelligent organization.

Request a Demo to learn more about how AuditComply can help you manage and maintain your UK SOX environment. 

The Sarbanes-Oxley Act of 2002

In 2002, the Sarbanes-Oxley Act was passed in the United States Congress with the goal of increasing transparency and accountability in financial reporting. Introducing rules to protect both the public and shareholders from accounting errors, financial fraud and improving the accuracy of corporate disclosures.

SOX was introduced in light of a series of corporate scandals, Enron Corporation, Tyco International plc, and WorldCom to name a few. These events had a severe impact on public and investor confidence, increasing the need to introduce and overhaul existing regulatory standards to mitigate future malpractice.

Since the introduction of SOX, the number of restatements reported by US public companies has steadily decreased. It reached its lowest level in 2019 having decreased by over 90 percent in the last 15 years. In a 2017, Centre for Audit Quality survey, 79 percent of CFOs who took part felt that the overall quality of information in audited financial statements had improved since the enactment of SOX and 85 percent believed the external audit of their company’s internal controls over financial reporting has helped their company.

World’s largest automotive safety supplier introduces AuditComply to simplify a complex supplier network

The customer recognized the need to unify and consolidate their Audit, Quality and Supply Chain management functions. Requiring an agile platform that could assess thousands of global suppliers.

SOX Introduction in the UK

In 2019, Sir Donald Brydon issued his review of the UK audit industry. Sir Donald Brydon’s review into the quality and effectiveness of audit in the UK outlined 68 recommendations for improving the audit process. That report, handed down on 18 December 2019, is now widely known as the Brydon review. He highlighted the need for better reporting on the effectiveness of financial controls, calling for the introduction of a UK version of the US SOX internal controls reporting regime.

UK SOX is now a key element of wider audit sector reforms proposed in the Department for Business, Energy and Strategy (BEIS) consultation: “Restoring trust in audit and corporate governance”, launched on 18th March 2021 (you can view the full report here). Within the consultation, over 98 questions are included covering nearly all of the recommendations set out from the review from Brydon, along with another 2018 review by Kingman. 

The date for introduction is still unclear, however, PwC suggests we won’t see a UK SOX proposal come to fruition until near the end of 2023. 

Internal Audit Preparation 

It’s important IA is proactive and prepared. Your IA team will already have the Risk & Control skill sets and knowledge of the business to effectively build a framework for continuous assessment and improvement. However, before the groundwork is laid, be sure the right people and technology have been employed for the upcoming challenge. 

We recognise teams still have problems maintaining their control environment so here are a few items to consider as we look towards the introduction of a UK SOX reporting regime:

UK SOX Compliance Software

Want to learn more? Request a Demo to learn more about how AuditComply can help you manage and maintain your UK SOX environment.

About AuditComply

AuditComply is a leading Enterprise Audit & Risk Management platform accelerating GRC and digital transformation for enterprises. 

Trusted by the world’s largest Fortune 100 companies and used by thousands of users across the globe. AuditComply provides a flexible, easy-to-use solution to actively manage Risk, Compliance & Quality programs to the highest GRC standards. Using real-time insights to navigate complex regulations, avoid disruptions and build a more risk intelligent enterprise.

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