sox-testing

SKILL.md

SOX Compliance Testing

If you see unfamiliar placeholders or need to check which tools are connected, see CONNECTORS.md.

Important: This command assists with SOX compliance workflows but does not provide audit or legal advice. All testing workpapers and assessments should be reviewed by qualified financial professionals before use in audit documentation.

Generate sample selections, create testing workpapers, document control assessments, and provide testing templates for SOX 404 internal controls over financial reporting.

Usage

/sox <control-area> <period>

Arguments

control-area — The control area to test:

revenue-recognition — Revenue cycle controls (order-to-cash)

procure-to-pay or p2p — Procurement and AP controls (purchase-to-pay)

payroll — Payroll processing and compensation controls

financial-close — Period-end close and reporting controls

treasury — Cash management and treasury controls

fixed-assets — Capital asset lifecycle controls

inventory — Inventory valuation and management controls

itgc — IT general controls (access, change management, operations)

entity-level — Entity-level and monitoring controls

journal-entries — Journal entry processing controls

Any specific control ID or name

period — The testing period (e.g., 2024-Q4, 2024, 2024-H2)

Workflow

1. Identify Controls to Test

Based on the control area, identify the key controls. Present the control matrix:

Control #
Control Description
Type
Frequency
Key/Non-Key
Risk
Assertion

[ID]
[Description]
Manual/Automated/IT-Dependent
Daily/Weekly/Monthly/Quarterly/Annual
Key
High/Medium/Low
[CEAVOP]

Control types:

Automated: System-enforced controls with no manual intervention

Manual: Controls performed by personnel with judgment

IT-dependent manual: Manual controls that rely on system-generated data

Assertions (CEAVOP):

Completeness — All transactions are recorded

Existence/Occurrence — Transactions actually occurred

Accuracy — Amounts are correctly recorded

Valuation — Assets/liabilities are properly valued

Obligations/Rights — Entity has rights to assets, obligations for liabilities

Presentation/Disclosure — Properly classified and disclosed

2. Determine Sample Size

Calculate sample sizes based on control frequency and risk:

Control Frequency
Population Size (approx.)
Recommended Sample

Annual
1
1 (test the instance)

Quarterly
4
2

Monthly
12
2-4 (based on risk)

Weekly
52
5-15 (based on risk)

Daily
~250
20-40 (based on risk)

Per-transaction
Varies
25-60 (based on risk and volume)

Adjust for:

Risk level: Higher risk controls require larger samples

Prior year results: Controls with prior deficiencies need larger samples

Reliance: Controls relied upon by external auditors may need larger samples

3. Generate Sample Selection

Select samples from the population using the appropriate method:

Random selection (default for transaction-level controls):

Generate random numbers to select specific items from the population

Ensure coverage across the full period

Systematic selection (for periodic controls):

Select items at fixed intervals with a random start point

Ensure representation across all sub-periods

Targeted selection (supplement to random, for risk-based testing):

Select items with specific risk characteristics (high dollar, unusual, period-end)

Document rationale for targeted selections

Present the sample:

SAMPLE SELECTION
Control: [Control ID] — [Description]
Period: [Testing period]
Population: [Count] items, $[Total value]
Sample size: [N] items
Selection method: [Random/Systematic/Targeted]

| Sample # | Transaction Date | Reference/ID | Amount | Selection Basis |
|----------|-----------------|--------------|--------|-----------------|
| 1        | [Date]          | [Ref]        | $X,XXX | Random          |
| 2        | [Date]          | [Ref]        | $X,XXX | Random          |
| ...      | ...             | ...          | ...    | ...             |

4. Create Testing Workpaper

Generate a testing template for each control:

SOX CONTROL TESTING WORKPAPER
==============================
Control #: [ID]
Control Description: [Full description of the control activity]
Control Owner: [Role/title — to be filled by tester]
Control Type: [Manual/Automated/IT-Dependent Manual]
Frequency: [How often the control operates]
Key Control: [Yes/No]
Relevant Assertion(s): [CEAVOP]
Testing Period: [Period]

TEST OBJECTIVE:
To determine whether [control description] operated effectively throughout the testing period.

TEST PROCEDURES:
1. [Step 1 — What to inspect, examine, or re-perform]
2. [Step 2 — What evidence to obtain]
3. [Step 3 — What to compare or verify]
4. [Step 4 — How to evaluate completeness of performance]
5. [Step 5 — How to assess timeliness of performance]

EXPECTED EVIDENCE:
- [Document type 1 — e.g., signed approval form]
- [Document type 2 — e.g., system screenshot showing review]
- [Document type 3 — e.g., reconciliation with preparer sign-off]

TEST RESULTS:

| Sample # | Ref | Procedure 1 | Procedure 2 | Procedure 3 | Result | Exception? | Notes |
|----------|-----|-------------|-------------|-------------|--------|------------|-------|
| 1        |     | Pass/Fail   | Pass/Fail   | Pass/Fail   | Pass/Fail | Y/N    |       |
| 2        |     | Pass/Fail   | Pass/Fail   | Pass/Fail   | Pass/Fail | Y/N    |       |

EXCEPTIONS NOTED:
| Sample # | Exception Description | Root Cause | Compensating Control | Impact |
|----------|----------------------|------------|---------------------|--------|
|          |                      |            |                     |        |

CONCLUSION:
[ ] Effective — Control operated effectively with no exceptions
[ ] Effective with exceptions — Control operated effectively; exceptions are isolated
[ ] Deficiency — Control did not operate effectively
[ ] Significant Deficiency — Deficiency is more than inconsequential
[ ] Material Weakness — Reasonable possibility of material misstatement not prevented/detected

Tested by: ________________  Date: ________
Reviewed by: _______________  Date: ________

5. Provide Common Control Templates

Based on the control area, provide pre-built test step templates:

Revenue Recognition:

Verify sales order approval and authorization

Confirm delivery/performance evidence

Test revenue recognition timing against contract terms

Verify pricing accuracy to contract/price list

Test credit memo approval and validity

Procure to Pay:

Verify purchase order approval and authorization limits

Confirm three-way match (PO, receipt, invoice)

Test vendor master data change controls

Verify payment approval and segregation of duties

Test duplicate payment prevention controls

Financial Close:

Verify account reconciliation completeness and timeliness

Test journal entry approval and segregation of duties

Verify management review of financial statements

Test consolidation and elimination entries

Verify disclosure checklist completion

ITGC:

Test user access provisioning and de-provisioning

Verify privileged access reviews

Test change management approval and testing

Verify batch job monitoring and exception handling

Test backup and recovery procedures

6. Document Control Assessment

Classify any identified deficiencies:

Deficiency: A control does not allow management or employees to prevent or detect misstatements on a timely basis. Consider:

Likelihood of misstatement

Magnitude of potential misstatement

Whether compensating controls exist

Significant Deficiency: A deficiency (or combination) that is less severe than a material weakness but important enough to merit attention by those responsible for oversight.

Material Weakness: A deficiency (or combination) such that there is a reasonable possibility that a material misstatement will not be prevented or detected on a timely basis.

7. Output

Provide:

Control matrix for the selected area

Sample selections with methodology documentation

Testing workpaper templates with pre-populated test steps

Results documentation template

Deficiency evaluation framework (if exceptions are identified)

Suggested remediation actions for any noted deficiencies