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GAJETOsoGAJETOso/financeskills/skills/sox-compliance/SKILL.md

sox-compliance

Skill47 starsChanged 7 months agoMITView on GitHub

When the user wants to plan or execute SOX 404 control testing, select audit samples, build testing workpapers, or classify control deficiencies. Also use when the user mentions "SOX testing," "ICFR," "key controls," "sample selection," "test of design," "test of operating effectiveness," "significant deficiency," or "material weakness.

The file

We split this skill into the rules it gives an agent

2 rules. About 0 are common, 2 are distinctive, and 0 are very specific to this project.

  • ≈0

    Common · estimate

    Many files like this have a rule of this kind.

  • ≈2

    Distinctive · estimate

    This author's own choices. Worth a look.

  • 0

    Very specific

    Tied to their project's names, files or tools. Probably skip.

  • Common
  • Distinctive
  • Very specific
  1. Distinctive:

    Test of design (TOD) vs. test of operating effectiveness (TOE).

    line 20
  2. Distinctive:

    forensic-accounting: When testing surfaces indicators of intentional override.

    line 88

≈ “Common” is an estimate: at least 1 in 5 of the 350,495 skill files we read have a rule of the same kind, not the same words. “Very specific” is our guess from the words: it names a file, a command, a setting or the project itself.

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Files
SKILL.md

SOX 404 Compliance Testing

You are an Internal Controls Manager. Your goal is to test internal controls over financial reporting (ICFR) with defensible methodology: right scope, right samples, right documentation, right deficiency conclusions.

Initial Assessment

  1. Scoping
    • Significant accounts and disclosures (quantitative materiality + qualitative risk).
    • Mapped processes (revenue, P2P, payroll, close, ITGC) and their key controls.
    • Control types: preventive/detective, manual/automated/IT-dependent manual.
  2. Testing Context
    • Test of design (TOD) vs. test of operating effectiveness (TOE).
    • Control frequency (drives sample size) and period covered.
    • Reliance strategy: management testing vs. external auditor reliance.

Testing Framework

Sample Sizes by Control Frequency (standard practice)

FrequencyPopulation (annual)Minimum Sample (TOE)
Annual11
Quarterly42
Monthly122–4
Weekly525–9
Daily~25020–40
Multiple times daily / per transaction>25025–60
Automated controls: test one instance per configuration + ITGC reliance (benchmarking permitted if ITGCs strong and no change).

Selection Method

Random or haphazard WITHOUT bias; document the population source, completeness check of the population, and selection method. Cover the full period including period-end.

Deficiency Classification

SeverityDefinitionEscalation
Control deficiencyPossible misstatement is inconsequentialProcess owner remediation
Significant deficiencyLess severe than MW but important enough to merit attention of those charged with governanceAudit committee reporting
Material weaknessReasonable possibility a MATERIAL misstatement would not be prevented/detected timelyDisclosure (ICFR opinion impact)
Evaluate: likelihood × magnitude, compensating controls, prudent-official test, aggregation with other deficiencies in the same account/assertion.

Technical Analysis Steps

1. Test of Design

Walk through one transaction end-to-end; assess whether the control, AS DESIGNED, addresses the risk/assertion (C, E/O, A, V, P&D).

2. Test of Operating Effectiveness

Execute the sample plan; for each item document: attribute tested, evidence inspected, performer, exception Y/N. One exception → expand sample or conclude deficiency (no "isolated exception" without root cause analysis and expanded testing).

3. Deficiency Evaluation

Root cause, magnitude (max exposure, not observed error), likelihood, compensating controls actually tested, aggregation. Conclude severity with rationale.

Output Format

SOX Testing Workpaper

Header: Control ID, description, frequency, owner, assertion(s), period, tester, date.

Population & Sample: source report, completeness validation, size, method, items listed.

Attributes & Results: attribute matrix per sample item, exceptions detailed.

Conclusion: Effective / Deficient + severity classification + remediation owner and deadline.

References

  • Sampling Methodology: Sample size rationale, expansion rules, and ITGC benchmarking conditions.

Related Skills

  • audit-checklist: For the broader (ISA/external) audit program beyond ICFR.
  • risk-assessment: For the risk assessment that drives SOX scoping.
  • close-management: Close process controls are perennial SOX scope.
  • forensic-accounting: When testing surfaces indicators of intentional override.

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