Two weeks on from the release of the government white paper ‘Restoring trust in audit and corporate governance’ and internal controls over financial reporting (UK SOx) is, perhaps unsurprisingly, at the top of the corporate agenda.
The proposed reforms are wide ranging and while significant questions remain around exact timing and scope what is clear is that Directors will have increased personal accountability and need to provide greater visibility to external stakeholders on why and how they are comfortable with the information disclosed on the performance of their business.
At this early stage, and as a number of my clients mobilise impact assessments with a view to standing up programmes in the second half of 2021, I think it is critical for senior management to define the principles (and associated metrics) against which a successful implementation of UK SOx will be measured.
What we have learned from the implementation of other SOx regimes around the world is that without clear definition of achievable business outcomes not only do implementation and BAU run costs increase but the opportunity is missed to transform business and risk management.
Success will undoubtedly be split into those primary outcomes which must be achieved on Day 1 and a range of longer-term outcomes which while harder to measure are equally important. UK SOx implementation is not a one-off exercise, whatever is implemented will live on in business as usual – it must be sustainable, cost efficient and value adding.
Longer term outcomes:
And that last point is key.
Make no mistake, success will require a cultural shift, and that is difficult. But going into this with a transformation mindset that is supported by senior leadership, focused on benefits and not simply about ticking the compliance box will allow you to explain to the wider organisation why they need to change and greatly improve your chances of success.
We provide end-to-end support, from design and implementation all the way through to the ongoing management of your financial controls framework.
For more information on how we can support you on your implementation journey click here.