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First Time's the Charm: Public company prepares for first time auditor testing of SOX 404 compliance

Challenge 
A small public company in the life sciences sector, that had gone public several years prior, hit the $75 million market capitalization threshold and was planning for the first audit of its internal control over financial reporting (ICFR) under the SOX 404 regulations. The company had developed some documentation around ICFR for its own SOX certifications but the CFO and staff involved had never been through an ICFR audit before and their controls had never actually been tested by an auditor.

Solution
Wolf & Company worked proactively and collaboratively during the planning process and provided helpful guidance as the company updated its internal control matrices.  Based on our experience working with many public companies including smaller public companies, we provided feedback as to best practices and a gap analysis.  Wolf also stayed involved throughout the process and acted as an intermediary to the audit committee providing proactive status updates.

Result
The client was able to update and enhance its documentation prior to the ICFR audit beginning, which resulted in a smoother process and a clean audit opinion on ICFR.  Our involvement also allowed the company to develop a more formalized audit plan based upon a top-down, risk-based review of their specific activities and the related controls, rather than a less focused, inefficient review.  The CFO stated that the experienced perspective Wolf provided was incredibly helpful and also made for an informed and comfortable Audit Committee.