Reinvigorating Your SOX Program: Strategies for Optimization and Modernization 

Since 2002, the Sarbanes-Oxley Act (SOX) has been the cornerstone of corporate accountability, ensuring robust internal controls over financial reporting. As business priorities evolved and pressures mounted, many SOX programs quietly shifted into autopilot. Consequently,  internal controls became outdated, inefficient, and misaligned with today’s strategic goals. The result? Governance is a burden rather than a value driver.

Why a Future-Ready SOX Program Matters More Than Ever

Today, transformation isn’t a choice – it’s a necessity. The traditional approach to SOX compliance – characterized by extensive manual testing and documentation – is proving unsustainable in a world of AI and automation. Modernizing your SOX program ensures it remains relevant, agile, and future-ready while aligning with strategic priorities.

To do more than just check compliance boxes, a SOX program should:

• Align with strategic priorities: Ensuring that internal controls support – not hinder – business agility and growth.
• Drive operational efficiency: Leveraging automation, analytics, AI, and risk-based approaches to reduce manual effort and increase insight.
• Enhance stakeholder confidence: Demonstrating a proactive commitment to transparency, accountability, and long-term value creation.
• Support resilience and adaptability: Enabling organizations to respond quickly to emerging risks and regulatory changes.

By reimagining your SOX program as a strategic enabler, you can unlock new value, reduce risk, and position your organization for sustainable success.

Important Strategies for Updating Your SOX Program

Industry leaders have identified several key strategies for optimizing SOX compliance programs. Here are four strategies to help you transform your SOX compliance into a forward-looking, value-driven function:

1. Modernize the Risk Assessment and Optimize Control Structure

A critical component of optimizing your SOX program is right-sizing it to focus resources on the most significant risks. The risk assessment process involves validating your SOX scope aligns with the company’s most significant risks and prioritizing testing and remediation efforts based on the severity and likelihood of risks. Risk assessment factors for modernization should include:

• Back to basics: Quantitative and qualitative risk factors remain the foundation on which the SOX risk assessment should be built. These factors – such as financial statement impact (e.g., materiality), complexity, volume of transactions, and susceptibility to fraud – help ensure the control environment is aligned with the areas of greatest exposure and business relevance. Aligning with the external auditor on this view will ensure control assessments are focused on the most significant areas of the company.
• Cybersecurity and data privacy: As cyber threats and data breaches become increasingly sophisticated, it’s crucial for organizations to integrate cybersecurity and data privacy assessments into their SOX programs. This includes evaluating IT general controls (ITGCs) related to access management, change management, and data integrity, which are foundational to protecting financial systems and sensitive information. Additionally, ensure your IT and Legal teams have sufficiently defined “material breach” for your organization and have a clear process for assessing whether a cyber breach needs to be disclosed.
• Incorporate data analytics: Leveraging advanced analytics can significantly enhance the detection and identification of anomalies in financial transactions. By incorporating data analytics into the SOX program, organizations gain deeper insights, improve oversight, and make informed decisions based on data-driven findings. Common areas where data analytics can be leveraged include user access reviews, change management, Order-to-Cash and Procure-to-Pay cycles, and manual journal entries.

Once you’ve ensured your focus is on the most material risks and accounts, the next step is to streamline your control environment. This involves reducing the number of key controls by identifying redundancies and reclassifying those that are no longer critical. Over time, key controls often accumulate in response to specific issues, leading to an over-engineered control framework. Each year, management should critically assess whether each key control is truly essential and confirm the associated risk isn’t already effectively mitigated by other controls. Additionally, organizations should prioritize replacing manual controls with automated ones wherever feasible, as automation enhances consistency, reduces human error, and improves testing efficiency.

2. Technology and Automation

One of the most impactful opportunities to optimize a SOX program lies in leveraging technology and automation across both control execution and testing. The integration of AI can significantly enhance multiple stages of the SOX lifecycle, such as identifying transaction anomalies during risk assessments, automating control testing documentation, and compiling results for streamlined SOX reporting. By embedding AI and automation, organizations can reallocate resources from repetitive, manual tasks to more strategic, value-added analysis.

• In management’s control environment, organizations are focusing on designing and implementing automated application controls within enterprise systems to reduce reliance on manual controls. These embedded controls – such as automated approval workflows, system-enforced segregation of duties, and configurable exception alerts – help ensure consistent execution and reduce the risk of human error. Additional areas for automating finance controls include account reconciliations, generating journal entries, evidencing review of close schedules, and other close activities.
• For the testing of SOX controls, automation tools and data analytics streamline evidence collection and exception reporting, significantly reducing manual effort and increasing the coverage over transactions. Generative AI tools assist in drafting process documentation, mapping risks to controls, and analyzing control effectiveness.
• Finally, in project managing the SOX program, cloud-based workflow tools and robotic process automation (RPA) are being used to coordinate tasks, track progress, and ensure timely compliance, while also facilitating collaboration among cross-functional teams. These innovations are transforming SOX compliance from a reactive, labor-intensive process into a strategic, tech-enabled function.

To fully realize these benefits, management should assess and maximize the capabilities of existing technology. This includes thoroughly evaluating current tools, engaging with vendors to understand recent enhancements, and ensuring available features are fully utilized before pursuing new investments.

3. Fostering Collaborative Relationships

Collaborative working relationships among key stakeholders remain one of the most powerful drivers of SOX compliance success. Even the most advanced technologies cannot replace the human element – true compliance excellence is led by people, not platforms.

• Control owners play a pivotal role by fostering transparency and embracing a mindset of continuous improvement. When they proactively share control challenges and potential gaps, it minimizes year-end surprises and allows sufficient time for remediation. Their deep operational knowledge also positions them to identify opportunities for control efficiency and risk mitigation – insights that become actionable when shared with internal audit.
• External auditors carry significant responsibility in issuing opinions on internal control effectiveness. Management can strengthen this relationship by understanding the expectations auditors must meet – both from the PCAOB and their own firm’s standards – and collaborating on streamlined approaches that meet compliance goals without overburdening control owners. Moreover, external auditors bring a broad perspective from working across industries and can offer valuable insights to enhance control design and execution.
• Internal audit serves as a strategic partner in SOX programs, supporting control owners through process updates, independent testing, training, and remediation efforts. With their objective lens, internal auditors are well-positioned to identify emerging risks and control weaknesses early, before they escalate into significant issues.

Ultimately, SOX compliance thrives when these stakeholders operate as coordinated team – communicating openly, aligning on expectations, and working toward a shared goal of strong, sustainable internal controls.

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4. Monitor Continuous Improvement with KPIs

Drive continuous improvement in your SOX program by defining and monitoring a set of well-aligned KPIs that go beyond compliance and reflect operational and strategic value. By establishing clear metrics, organizations gain actionable insights into the effectiveness and efficiency of their internal controls. KPIs may include:

• Control failure rate over time, including repeat findings.
• Average time to remediate a control deficiency.
• Automated vs. manual controls ratio, including trend over time.
• Timeliness of control execution.
• Deficiencies identified by management or internal audit vs. external audit.
• SOX hours per FTE, or total SOX hours year-over-year trend.
• Total key controls year-over-year trend.
• Percentage of external auditor reliance, year over year.

Regularly tracking these KPIs enables proactive identification of gaps and promotes accountability among control owners. Moreover, integrating business-value KPIs, like cost per control and stakeholder satisfaction, helps demonstrate the broader impact of the SOX program on organizational performance. This continuous feedback loop fosters a culture of improvement, enhances risk management, and ensures the SOX program evolves in step with business priorities.

Looking Ahead: Value Creation and Strategic Alignment

As organizations continue to evolve their SOX programs, the focus will increasingly shift toward value creation and strategic alignment. The most successful programs will be those that can demonstrate clear business benefits while maintaining robust compliance capabilities. This requires ongoing investment in technology, process improvement, and talent development. To modernize your SOX program and maximize the value of your investment, contract CrossCountry Consulting.