Internal Controls Aren’t Just for Large Publicly Traded Companies

Private or smaller publicly traded companies that proactively employ internal controls over financial reporting benefit from:

  • lower capital costs
  • higher company valuations
  • increased interest by investors
  • fewer roadblocks to transfer of ownership (if private)
  • increased stock price (if traded publicly)

Formalizing or enhancing internal controls, like those expected of larger public companies, results in more reliable financial reporting and increases the credibility of management’s operations for bankers, investors, regulators and other stakeholders.

Providing reliable financial information enables the company to produce financial statements with greater integrity and transparency. Internally, management can also make more effective decisions about the organization’s strategy, which is critical to maintaining a competitive advantage as well as potentially preparing for a public offering or a strategic transaction.

Process, Risk and Control

Understanding and documenting the company’s transactional flows, leads to a clearer understanding of financial risk.  This, in turn, enables management to focus on control design.  Effective controls help management realize and focus on the areas of highest risk – to optimize its financial reporting, operations and compliance. Through this analysis, management is better able to identify, streamline, and potentially automate, processes that divert staff attention from critical activities. One additional benefit – by centralizing process and controls documentation, management can reduce audit-related expenses.

That said, obtaining and reporting the right financial information depends in part on how well management identifies and mitigates financial statement risks.  This may seem complex and challenging, however, it becomes manageable with the right messaging, methodology and discipline across the organization — regardless of the company’s size, complexity or structure.

Consider Getting Outside Help When Setting Up Your Internal Controls

For private companies who often lack a dedicated compliance resource, we recommend enlisting the help of experienced SOX advisors who will work with you to outline a roadmap, mitigate disruptions, and bring expertise to streamline the process and train staff.

For questions or more information related to an internal audit, controls optimization or SOX compliance, reach out to our team at

First Year SOX Compliance Checklist and Guide

Our First Year SOX Compliance Checklist and Guide, developed by SOX professionals, provides real-world insights into the best approach newly public companies can take to meet their critical compliance obligations.

Download Now