Read the Case Study
Case Study
WilliamsMarston Clears the Way for Internal Controls Excellence
Learn how WM helped design and implement an effective internal control environment and remediate material weaknesses for a newly public biotechnology company.
The Challenge
Designing and implementing an effective internal control environment proved uncharted territory for a newly public biotechnology company.
Section 404 of the Sarbanes Oxley (SOX) Act requires public companies to report on the cogency of their internal control over financial reporting within certain filings with the SEC. As such, public companies must design, implement and execute internal controls that serve as checks and balances to monitor business activities and financial reporting – and management must assess the effectiveness of the control environment.
The newly public biotechnology company had never formally identified or documented significant processes or the related internal controls relevant to the organization. Additionally, during the IPO process the company had identified certain material weaknesses in their internal control environment, primarily related to a lack of segregation of duties and controls over journal entries.
The Solution
WM experts overhauled the company’s internal control structure – and addressed the root cause of identified material weaknesses.
WM performed a top-down risk assessment to define the scope of the SOX program based on qualitative and quantitative factors, mapping the financial statements to core business processes to identify relevant accounts and the related financial statement assertions.
WM conducted walkthroughs of the company’s key processes to identify and document entity-level controls, IT general controls and key process-level controls over financial reporting for all significant accounts. The team then developed several risk and control matrices, process flowcharts and process narratives for each significant process.
The team prepared a robust gap analysis on the current internal control structure and addressed identified gaps by designing and implementing internal controls to ensure the related financial statement risks were managed along with certain enhancements to the roles and responsibilities of key personnel. WM also determined the operation of controls cadence was appropriate and tested the operating effectiveness of the controls.
WM then worked to understand the root cause of the identified material weaknesses considering all components of the COSO framework and developed a remediation plan to ensure the proper controls were designed, implemented and thoroughly tested for optimal effectiveness and that the material weaknesses were fully remediated.
The Result
WM cleared the way for an effective internal control environment and remediated material weaknesses, resulting in the company’s subsequent clean audit opinion.
WM completed its analysis and made critical adjustments to close the gaps within the company’s control environment through a fully designed and implemented program. The new and enhanced controls were exhaustively tested for operational effectiveness and material weaknesses were remediated. The company received a clean audit opinion in conjunction with their subsequent Form 10-K filed with the SEC.
THE TEAM RESPONSIBLE
Ready for clear guidance and powerful outcomes? Reach out to the team today.
Meet the Entire Team
Hannah Leech
Managing Director – Accounting Advisory
Hannah brings more than 13 years of accounting advisory and internal control transformation experience to WilliamsMarston, where she is a leader in the process and controls offering.
She is recognized for guiding public and pre-IPO companies through the design and implementation of internal control frameworks, Sarbanes-Oxley (SOX) 404(a) and 404(b) compliance readiness assessments, gap identification and remediation, SOX program management, and operating effectiveness testing. Her industry experience spans life sciences, manufacturing, technology, software-as-a-service, aerospace, telecommunications, and cryptocurrency.
In addition to leading the process and controls offering, Hannah has advised clients on a variety of complex accounting matters, including revenue recognition, collaboration agreements, stock-based compensation, preferred stock, SEC reporting, purchase accounting, audit readiness, and initial public offerings. She has served as an interim Controller, Director of Financial Reporting, and Director of Internal Audit for both private and public companies in the biotechnology and technology sectors.
Prior to joining WilliamsMarston, Hannah was a Senior Accountant at TA Associates Management, LP, a Boston-based private equity firm. She began her career in Deloitte LLP’s Audit and Enterprise Risk Services Assurance practice, providing assurance and advisory services to public and private clients in the consumer finance, life sciences, technology, and insurance industries, with a focus on US GAAP, SEC reporting, and SOX compliance.
Hannah holds a Bachelor of Science degree from Quinnipiac University, graduating magna cum laude.
Michael Carpino
Manager – Accounting Advisory
Michael brings six years of accounting and financial reporting experience to WilliamsMarston. Since joining WilliamsMarston, Michael has assisted clients in the biotechnology, healthcare, life sciences, software, and beverage industries. He has advised clients on a variety of technical accounting matters including revenue recognition, collaborative arrangements, lease accounting, IPO readiness, SEC reporting, Sarbanes-Oxley compliance, stock-based compensation, accounting and reporting for complex financial instruments and business process improvement. Michael has served in various interim management roles for public and private clients in the life sciences, technology, and beverage industries. He supported lender reporting, payroll, monthly close management, and assisted with audit readiness and daily operational tasks such as vendor creations and accounting team oversight.
Prior to joining WilliamsMarston, Michael was an Associate in the Assurance practice at PricewaterhouseCoopers LLP in Boston where he served both public and private clients in the entertainment, media and technology industries. While at PwC, Michael provided audit and advisory services pertaining to US GAAP, SEC reporting and Sarbanes-Oxley Compliance.
Michael is a Certified Public Accountant in the Commonwealth of Massachusetts and holds a Bachelor of Science degree in Accounting from Bentley University, where he graduated cum laude.
BRING US YOUR CHALLENGES
Gain the insight to drive transformational outcomes. WilliamsMarston’s accounting, tax and valuation services will help you navigate your most complex challenges and see you through to success.
