Overview
After spinning off from a larger enterprise, a privately held company faced the challenge of becoming compliant with SOX (Sarbanes-Oxley) and SEC (Securities and Exchange Commission) requirements before going public. Initially, a quick SAP vanilla system was set up, replicating the system used by the parent company. However, the new enterprise needed a comprehensive overhaul to define and implement the necessary IT and business controls within a short timeframe to ensure full compliance. Aevitas IT was engaged to deliver a robust SAP solution that would establish the critical controls needed for a successful transition to a public company.
INDUSTRY:
Retail
IMPACT:
Robust IT Controls | SAP System Compliance | Enhanced Transaction Processing | Compliance Certification | Public Offering Readiness
Challenges
The company faced several significant challenges as it prepared to go public:
Basic SAP Setup
The existing SAP system was a basic, vanilla setup, lacking the sophisticated controls needed for SOX and SEC compliance.
Absence of IT and Business Controls
No formal IT or business controls existed, and these needed to be defined and implemented quickly.
Short Timeframe
The company had limited time to establish all necessary controls before the public offering.
Robust SAP Controls Needed
The SAP system required rigorous user system and application controls to comply with regulatory standards.
Complex Control Requirements
The company needed to define and implement controls at multiple levels, including:
- Business Controls: Ensuring compliance during transaction execution within SAP.
- IT Controls: Establishing system-level controls, user authorization based on Segregation of Duties (SOD), and transaction validation.
Goals and Objectives
Aevitas IT set out to achieve the following objectives:
Define and implement IT and business controls required for SOX and SEC compliance.
Establish robust SAP system controls, including user authorization and business transaction controls.
Ensure that all controls are implemented within the tight deadline to meet public offering requirements.
Achieve compliance through a secure and validated SAP environment.
Solution
Aevitas IT delivered a comprehensive compliance solution, utilizing its proven consulting methodology:
1
Compliance Needs Definition
Abstract legal compliance needs were translated into specific SAP controls, ensuring alignment with SOX and SEC requirements.
2
Control Review and Mapping
A thorough review of SAP system controls, user authorizations, and business rules for transaction control was conducted. These controls were mapped against IT and business compliance requirements.
3
Control Implementation
SAP system controls, user authorizations based on SOD, and transaction controls (such as validation and workflow authorization) were implemented, ensuring compliance and data integrity.
4
System Validation
Controls were tested and validated to ensure they met the regulatory requirements for internal controls.
Project Delivery
The project followed a structured approach to ensure timely delivery:
Abstract Compliance Definition
Aevitas IT worked closely with the enterprise to define compliance needs and translate them into SAP-specific controls.
Control Mapping and Design
SAP controls were carefully mapped to IT and business compliance requirements, with a focus on SOD and transaction validation.
Implementation and Training
The controls were implemented, and the enterprise’s workforce was trained to ensure smooth adoption of the new processes.
System Validation and Testing
The SAP system was rigorously tested to validate the effectiveness of the controls, ensuring compliance readiness.
Results and Impact
The implementation provided the company with significant business benefits:
Robust IT Controls
The enterprise now had well-defined and effective IT controls that aligned with SOX and SEC requirements.
SAP System Compliance
SAP was configured and optimized to support the necessary control policies, ensuring compliance during transaction processing.
Enhanced Transaction Processing
The enterprise gained superior transaction processing control, supported by validation and workflow authorizations.
Compliance Certification
The CEO and CFO could certify the company’s internal controls with confidence, backed by the well-established SAP control environment.
Public Offering Readiness
The enterprise was fully IT-compliant and ready to go public, enabling access to larger funding sources and future growth opportunities.
Conclusion
Aevitas IT played a crucial role in transforming the company’s SAP environment to meet the rigorous demands of SOX and SEC compliance. By implementing robust IT and business controls within SAP, Aevitas IT ensured that the enterprise was fully prepared to go public. The project not only provided the company with the necessary compliance framework but also delivered enhanced transaction processing and system control, positioning the enterprise for continued success and growth as a publicly traded company.
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