Headcount Management & Sarbanes Oxley (SOX) Compliance
Table of Contents
How to Establish SOX Compliance for Headcount
Most companies would not pass a SOX compliance audit for headcount & employment actions because the structure of the systems does not report from a unified set of data.
What is SOX Compliance?
A set of practices, controls, and procedures that publicly traded companies must implement to improve corporate governance/protect investors by increasing the accuracy and reliability of financial reporting.
What is Headcount SOX Compliance?
Headcount spend is typically the largest cost center for most companies, and has a few SOX compliance requirements. Of the 5 critical SOX compliance areas, the three that apply to headcount are:
Internal Controls for Headcount Financials
Processes tracking (headcount requests & approvals) for all net new headcount adds, and existing employee actions. Companies are also required to record changes to the process of how new headcount spending is approved.
Financial Transparency
An up-to-date forecast of all headcount spend, as well as a history of all financial changes, categorized to inform the reason for change & the measure of its impact.
Data Retention
YoY storage of headcount spend. A history of all users’ access to the data. Tracking of spend through the employee lifecycle.
Disadvantages of Manual SOX Compliance
When headcount approvals are in email or Slack, it’s very difficult to maintain a log of every requisition that goes through that process. Even when approvals are in a “workaround system” (like Jira or Monday), the changes to that process can not be tracked. Manual SOX compliance is difficult because:
No Change Log for Headcount Changes
When the hiring plan or an individual requisition changes, there’s no history of the person who requested, the reason for the request, the approval, or the budget impact.
Labor-Intensive Investigations During Audit
Investigating the requisition or hiring plan changes requires email audits and trying to follow the story across multiple systems and platforms. Approval processes are not defined, so tracking changes is usually an estimate of one to the next.
Missing Information on Data
Individual requisitions often don’t have a unique identifier that’s referenced for changes. Changes to processes are not documented in a centralized place.
Four Ways Headcount365 is Used to Establish SOX Compliance
One of the best “hidden benefits” of a headcount management system like headcount365 is not only that SOX data is accurate, but it is produced automatically in the background as companies use the tool to request, approve, hire & backfill headcount.
A Unified Headcount Request & Approval Process with Built-in SOX Tracking
Headcount Approval Process Management
Headcount365 meticulously stores all headcount approval processes, including net new hires, backfills, transfers, and attrition. This comprehensive documentation ensures that every change is recorded and easily accessible.
Automated Workflow Reporting
The platform can automatically report on changes to any workflows, whether these changes pertain to individual workflows or the overall process. This feature is particularly valuable for SOX compliance, as it allows users to generate detailed reports on demand.
Periodic Reporting for Compliance
Users can effortlessly generate reports for any required period, ensuring they meet the stringent reporting requirements of the Sarbanes-Oxley Act. This capability significantly reduces the time and effort needed to produce accurate compliance reports.
headcount365’s request & approval system automatically delivers SOX compliance reports without any manual effort.
Controlled Permissions For All Users Tracking All Changes to Data Access
Centralized Access Management
Admin users can manage access to headcount data for all users from a single control panel. This centralized control simplifies the enforcement of data access policies and ensures that only authorized personnel can view or modify sensitive information.
Sensitive Access Reporting
Headcount365 provides detailed reports on who has access to sensitive data, enhancing transparency and accountability. This feature is crucial for SOX compliance, as it helps prevent unauthorized access and data breaches.
HRIS Hierarchy-Based Auto-Provisioning
The system automatically provisions access based on the HRIS hierarchy, ensuring baseline compliance with internal policies. Permissions can be customized down to individual users or specific data fields, including custom fields, giving companies complete control over data access.
headcount365’s employee management system ensures tracking of all user impact on headcount financials or processes.
Headcount SOX Compliant Change Log & Activity Feed
Detailed Variance Reporting For All Requisitions
Headcount365 offers comprehensive reports on total plan variance, covering the number of roles, their associated costs, and any changes made by users. This detailed analysis helps in understanding the financial impact of headcount changes.
An Activity Feed For Every User, Process, or Requisition
Admins can investigate changes at the requisition level, understand the reasons behind these changes, and group them by type. This granularity ensures that all adjustments are well-documented and justified.
AI-Powered SOX Compliance Tags
Headcount365 automatically tags changes critical for compliance reporting. High-risk changes are grouped into specific reports for admin users, ensuring they can take corrective actions swiftly.
headcount365’s requisition activity feed captures every change in a unified story so SOX audits take seconds, not hours.
Track Every Headcount Process in One Unified System
Comprehensive Process Storage System
All aspects of a company’s headcount process are meticulously documented and stored in Headcount365. This thorough documentation ensures that every step is both traceable and auditable, which is crucial for SOX compliance.
Automated SOX Reporting
These features lead to a 99% reduction in the time required to produce SOX reports related to headcount. Additionally, the data accuracy is significantly enhanced, being 10 times more precise due to the elimination of user-based errors from manual data entry across disparate systems.
headcount365’s workforce management platform ensures that all headcount processes & financials are unified across the HRIS, ATS, and FP&A systems for seamless SOX compliance.
Headcount365 is the HR Platform That Delivers SOX Compliance
Headcount365’s advanced features streamline SOX compliance, making it easier for recruiting and finance teams to manage headcount changes, control user permissions, perform variance analysis, and document processes. By leveraging these capabilities, public companies can achieve higher accuracy and efficiency in their compliance efforts, reducing the burden on their teams and enhancing overall transparency and accountability.