Sage-Tips

Is ICFR the same as SOX?

The Sarbanes-Oxley Act (SOX) was adopted in 2002 in light of the Enron crisis. Immediately, “SOX” became part of the daily business language. One critical aspect of corporate reporting and SOX compliance are effective Internal Controls over Financial Reporting (ICFR).

What is the difference between SOX and internal controls?

The main difference between SOX and internal audit is that SOX focuses on creating accountability of financial statements preparation. Internal audits generally evaluate the internal control of a company, including accounting processes and corporate governance.

What is difference between SOX and IFC?

While SOX is applicable at a consolidated financial statement level and requires only material subsidiaries to be covered, IFC is applicable at a stand-alone entity level.

What is ICFR compliance?

ICFR refers to the controls specifically designed to address risks related to financial reporting. In simple terms, a company’s ICFR consists of the controls that are designed to provide reasonable assurance that the company’s financial statements are reliable and prepared in accordance with IFRS.

What are SOX controls?

SOX controls, also known as SOX 404 controls, are rules that can prevent and detect errors in a company’s financial reporting process. Internal controls are used to prevent or discover problems in organizational processes, ensuring the organization achieves its goals.

How do you conduct an ICFR?

Approach

1. Identifying financial reporting elements, critical processes, supporting systems.
2. Account-level materiality and chart of accounts analysis.
3. Prepare a project plan and Identify process owners.
4. Prepare the RCM(Risk Control Matrix) & draft process flowcharts.
5. Identify gaps and what could go wrong in existing processes.

What are the 4 SOX controls?

These include control environment, risk assessment, control activities, information and communication, and monitoring. SOX is a complex law with 11 sections, each delineating mandates including oversight, auditor independence, and corporate responsibility.