For companies facing challenges with their internal control environment or new to the public company ecosystem, addressing and remediating significant deficiencies or material weaknesses in internal controls over financial reporting requires a strategic approach.
While people and processes remain critical for effective internal control environments, technology is playing a growing role and emerging as a root cause of challenges. This landscape is further complicated by the implementation of the U.S. Securities and Exchange Commission's cybersecurity disclosure rules.
Watch RSM US LLP's webinar, for an in-depth exploration of best practices and case studies for remediating material weaknesses and significant deficiencies in internal controls over financial reporting. Our team will discuss strategies to address root causes and provide insights on complying with the SEC's cybersecurity disclosure requirements to help minimize your remediation efforts.
Key Takeaways
- Material Weakness Trends: The webinar highlighted the increasing trend of material weaknesses and significant deficiencies in public company audits, with 7% of 2025 10-K filings containing at least one material weakness.
- Holistic Remediation Approach: Effective remediation of material weaknesses requires a holistic approach, addressing root causes through people, process, and technology, and ensuring strong organizational change management and tone at the top.
- Cross-Functional Collaboration Importance: A case study on segregation of duties emphasized the importance of cross-functional collaboration between IT and business process teams to successfully remediate control issues.
- SEC Cybersecurity Disclosure: The SEC's new cybersecurity rule mandates public companies to disclose their board's oversight of cyber risks, how cyber risks are managed, and any material cyber incidents, posing challenges in determining materiality and ensuring comprehensive risk management.
- Proactive Cybersecurity Measures: Organizations are encouraged to adopt proactive cybersecurity measures, including robust asset management, implementing control frameworks, continuous monitoring, and strengthening the human factor through training and awareness programs.
