CEO and Founder, AudITech
Table of Contents
Preparing a company for an IPO is a complex process. Many parts of the organization need to operate differently than they have until now, even if they seemed to be working well. This change is not organic but dictated by the IPO and the need to meet higher compliance requirements. In the long run, raising the level in all parts of the company will add significant value and enable substantial growth.
The ITGC process in the company is no different and must also be implemented as part of the IPO. In a word, ITGC is a process where the company audits and reviews basic IT processes that can affect financial reporting. Generally, companies preparing for an IPO, despite high awareness of the GRC (Governance, Risk, and Compliance) world, are simply not ready for the requirements that come with implementing the process. It’s a shame because if done correctly, it’s not that complex or painful for the organization. So, to properly implement ITGC in the organization, here are some tips learned and refined recently:
Technology Companies
Technology companies, especially those based on cloud technologies, face unique challenges in the ITGC process. Unlike traditional companies where the ERP system is the core of ITGC, in technology companies, it’s a completely different technological language that requires different preparation, risks, and work methodology. If the organization’s revenue is based on its technology, the risk is very significant, so it’s important to ensure you understand the language before starting the process.
Maturity Stage
Companies preparing for an IPO have usually reached an advanced maturity stage, meaning they have good work processes, embedded GRC practices, and excellent professionals. This shortens the path to implementing ITGC, but don’t assume you’re done. The ITGC process requires a rigorous standard of testing and documentation with an external auditor’s review at the end of the process, every year. Yes, every year (:
Sample Audit
Conducting a sample audit as preparation for an IPO is not a good practice. It does not reveal the root problems of the organization and creates loopholes for deficiencies. Use technology in all your audit scopes and ensure you cover everything, down to the last line.
Changing Scope
The scope you start with is usually not the scope you end the process with. As you delve into the organization’s work processes, many information systems that affect financial reporting in ways you hadn’t thought of will be identified. Ensure you address the risks correctly.
Efficiency in the Process
Preparing for an IPO requires many resources from the organization. Ensure you prepare for the process correctly, quickly, and with maximum depth.
Integrating Technology
Integrate technology into your audit and documentation processes. To prepare for an IPO at the required level, you need the right experience and people, but without the right tools and technology, the preparation process will remain superficial and won’t address deep-rooted issues. Invest in the right technology; it’s not that difficult and provides immense value when done correctly.
Good luck with your IPO preparation process!
