IPO Case Study: Controls & Governance

It's a very proud moment when our clients were able to go through a SOX compliance process and get through it very quickly. The way we conducted the SOX readiness assessment, first we go through a full gap analysis. The gap analysis would, in essence, tell you where to spend your time and certain areas that need the most attention. A lot of what we did to optimize financial reporting was really looking at their systems, as well as the controls and who's actually performing the controls. We had to look at time to reporting, so reduce cycle times, bring in new systems that potentially would be more efficient. And then the SEC reporting requirements require a lot of disclosures, so how they get there and putting tools in like Workiva and other tools that can actually help you streamline that process. From this particular case, our client didn't have major issues and controls. They were able to button things up and they were audit ready in a very short period of time.

One of the key factors too in having a successful IPO, whether it's reverse merger or you're a net new IPO, is really setting the stage and making sure you have that mindset. Don't just assume that once you're public and you start putting these processes in place, that everything's going to be static. Make sure that you're looking to improve along the way. So a lot of that starts from the beginning and educating CFOs and controllers and process owners on what to expect, not just in the project plan to go IPO and how you're going to adjust to making changes. But ultimately, how do you continue it and maintain it? Because there are changes in every organization. You're going to change processes. You may bring in a merger and an acquisition. You may bring in a new system. When you do that, let's try to improve the control environment and make it easier for those that are performing those controls to sustain that.

One key factor that companies don't realize is the resources that it does take to go public and sustain that. It doesn't necessarily mean that you have to do it all on your own. It's one of the reasons why companies bring us in. You certainly have to plan for it and look at your business processes and controls, especially your IT systems that support financial reporting. Most companies that go public don't realize the documentation that you have to put forth and the evidence that you need to comply with Sarbanes-Oxley. So it's a big documentation exercise. But at the same time, it's not all about documentation, it's about the mindset of being able to do the right thing, be efficient while we're doing the right thing, and obviously be effective.