No matter where they are in the world, most large companies must abide by all kinds of rules and regulations, both federal and internal.
SOX requirements are one of the many requirements that businesses need to keep track of, but they’re crucial to understand and comply with.
SOX requirements are essential for all public companies, and in this post, we’re going to go over how you can stay compliant with them when it comes to Microsoft Dynamics 365.
What Are SOX Requirements
Every public company is required to have a yearly SOX audit in order to stay compliant.
A SOX compliance audit is a mandatory once-a-year assessment that looks at how well your company is managing certain internal practices. These results are made available to the company’s shareholders.
The core purpose of SOX compliance audits (and the SOX requirements themselves) has historically been to verify the company’s purported financial statements. In recent years, however, auditing a company’s cybersecurity practices has become increasingly important and gotten more attention overall.
And here’s why it matters for our readers who are concerned about compliance with Microsoft Dynamics 365: SOX sections 302, 404, and 409 require that auditing and monitoring happen across internal controls, log-in activity, account activity, user active, information access, and network and database activity.
Why SOX Requirements Are Still So Complex
When it comes to the cybersecurity side of the equation, the requirements are still complex and tripping some businesses up.
This is partly because of all of the changes that have happened in recent years impacting public companies, including the following:
- Remote work has been booming. This means that access management has become more complicated for many businesses, who either tend to veer too lenient in their policies (resulting in security risks) or too stringent (making it almost impossible for their team to do the work). Not only are there more potential risks, they all have to be tracked.
- The complexity of Cloud-based technology. SaaS and Cloud-based tools have gotten more advanced in recent years. And the reality is that even if a company like Microsoft Dynamics were to have a security issue, it’s your responsibility if your customers are impacted.
- Talent shortages have been impacting businesses everywhere. This is particularly true in both audit and technology skillsets. If you don’t have the right team members with the right skills and knowledge to maintain compliance, it’s easy to end up violating the SOX requirements or audit procedures.
Section 404 Sox Compliance is Crucial for Dynamic 365 Users
When it comes to Dynamics 365 users, section 404 of SOX compliance is the most essential to pay attention to.
SOX 404 controls are rules that prevent, detect, and flag inconsistencies or errors in a company’s financial reporting system. This is done by using internal controls to prevent issues with the organizational process. Documentation is an important part of the process here.
This is because it’s the most expensive aspect of SOX compliance to implement, as it includes documenting and adequately testing different controls (both automated and manual) for a brand’s financial system. This is designed to ensure that the company’s financial reporting is accurate.
How Public Companies Can Stay Compliant with SOX Requirements
There are a lot of intricacies when it comes to SOX requirements, and they can be difficult to keep track of with large public companies.
Because of this, we recommend taking the following steps to ensure compliance while also increasing flexibility and potentially reducing costs:
Ensure The Organization Understands SOX Requirement
The first step to staying compliant is to understand exactly what’s expected for your business when it comes to SOX requirements. You can read more about current SOX requirements here.
It’s important to have key team members up to date on exactly what the requirements are and how to implement them. This includes educating and getting support from upper management and executives to ensure that SOX compliance is an ongoing priority.
Have a Clear Vision of Which Controls You Need
Your team needs to have a detailed list of which controls they need to implement in order to maintain compliance.
Make sure that your entire team understands exactly how the controls work and why they’re needed.
Determine Where Data Will Be Processed
It’s easy for large companies to end up with data in different silos across software, but ensuring properly aligned financial and cybersecurity data is important for SOX compliance.
Look at your data processing systems and see where all the data is going, and make sure that it’s all synced in one place. Data can be stored in different software, but it needs to have a centralized location for full transparency and access.
Work With Teams That Have Relevant Experience in the Tech Industry
Even if your own team members are tech-savvy and have read up on SOX compliance, we still recommend working with third-party agencies and consultants that work exclusively with access management and who help companies with SOX requirements regularly.
This is a service we deliver to our customers, helping them to become SOX compliant (and maintaining that compliance afterward). Because it’s a core focus of what we do, we can streamline the process of compliance and help your team set up the best system and internal controls to ensure that everything is functional, secure, and compliant.
Columbus' take on SOX compliance
Let’s take a quick look at four specific ways we can help your company with maintaining SOX requirements.
1. Build Robust & Functional Access Management Processes Driven by SOX Requirements
One major challenge that many large companies struggle with is creating access management solutions and processes that are both efficient and functional.
The challenge here is to keep workflow flexible not to damage productivity and at the same time to address SOX regulations.
We’ll work with you to create a robust, functional, and SOX-compliant user access management process that is supported by the technology you’re already using and your business’s specific needs.
Internal controls, when used correctly, will increase the reliability of your business’s financial reporting, ensuring that your statements and reports can avoid major errors. Not only will this keep you compliant, but it also makes sure that your investors, lenders, and your own business can make decisions based on accurate data.
If you need help either becoming SOX compliance or maintaining compliance in a more effective way, Columbus can help. Here’s what we do:
- Advise on & develop a uniform access policy
- Consider licensing, and optimize it if needed
- Advise on user on- and offboarding processes, along with general maintenance of D365FO users
- Execute on granting/removing access for new starters, or change of roles, based on your approval process
- Advise on and executes user access audits and security reporting using built-in D365FO capabilities
2. Clarify the Reporting & Control Requirements Needed for SOX Controls
After you restructure your access management processes, turn your attention to improving the reporting and control requirements needed for SOX compliance.
Work on a system-generating reporting within Dynamics 365 that will give you a more variable source of data that non-system generating reports.
These reports are easy to manipulate when it comes to the data included, so extra documentation of processes is crucial to maintain data integrity.
Companies can use both system-generating and non-system-generating reports, but it’s crucial to enable the transparency of each while ensuring that all controls are followed. This includes tracking and logging any changes along with creating a schedule of reporting to better enhance the reports and cross-checking the data from third-party systems to assess its viability.
3. Envision & Build The Security Model with Segregation of Duties Rules
You most probably want to support your business’s internal processes while also satisfying SOX requirements. The two can happen simultaneously with the right system and models in place.
So you need to establish all processes and settings for internal controls.
While doing this, assess the size and complexity of an organization alongside possible risks in order to determine suitable workflows and the separation of user duties, approval processes, and access thresholds.
The goal is to maintain high efficiency and productivity while avoiding any possible SOX violations.
This includes the following:
- Establish approval, authorization, and exception policy management (404)
- Establish procedures for internal control assessment and management (404)
- Prepare for audits and compliance requests
Sometimes this is easy, like when different groups of users need a set level of access.
Sometimes, though, this is more complex; a single user, for example, may wear several hats so to speak. Someone in the finance department can be both an invoice requestor and an approver. This means they could theoretically submit a “work expense” for a plane ticket that was actually for their own holiday and then approve it themselves.
As a result, we recommend using segregation of duties rules to segregate permissions to execute conflicting actions.
At this stage, we also look for different types of risks, because not all violations carry the same kind of risk. We’ll help you prioritize so you can work smarter so that you can maintain productivity and compliance without sacrificing either.
4. Security Strategy & Design
After you’ve taken all of the steps above, design, implement, and finalize your security strategy.
We would do this by helping you identify the best practices for user access management, security design, and data monitoring and reporting in Dynamics 365. These are some of the most important parts of that process:
- Define strategic initiatives within the D365FO security domain
- Execute projects within the D365FO security domain
- Advise on security accesses to grant internally and externally in D365FO environments as part of an overall environment strategy
- Implement security deployment flow
- Execute Segregation of Duties design and setup
- Advise on relevant data monitoring controls and can audit data changes logged within database logging to provide change reporting.
Public companies must be taking SOX compliance and requirements into consideration, and the good news is that we’re ready to help you do that.
With over 30 years of experience and an abundance of tech experience in security, access management, and Dynamics 365, Columbus helps our clients to create high-functioning access management systems that are productive and SOX compliant.
Ready to make sure your business is compliant, or to get your business following the SOX guidelines?
Get in touch with us here!