New UK SOx Regime: How You Can Leverage AI to Achieve Compliance

1. New UK SOx Regime: How You Can Leverage AI to Achieve Compliance Dr. Beadle Navaraj Finance Practice Lead & Senior Partner, CFO Advisory Services

2. Much like how the Enron Corporation scandal catalyzed the Sarbanes-Oxley Act, the British government has acted in the wake of notable business collapses. UK SOx will strengthen the UK Corporate Governance Code, mandating an explicit statement by directors on the effectiveness of the company’s internal controls, together with the basis for that assessment. wns.com 01

3. UK SOx Compliance: Who's Affected and When It Begins? While details are still pending, indications suggest that the UK SOx consultation paper, which imposes additional reporting obligations on Publicly Listed Entities (PIEs) — including both listed and unlisted companies, as well as limited liability partnerships with 750 or more employees and a turnover of at least GBP 750 Million — will be finalized soon. Additionally, the Financial Reporting Council (FRC) will be replaced by the Audit, Reporting and Governance Authority (ARGA) as the primary regulator for UK SOx. Company directors will also be mandated to report their efforts in detecting and preventing material fraud while enhancing transparency in risk management and monitoring. Securing Credibility in Financial Disclosures Elevating Safeguards for Shareholder Investments Enhancing Management Data for Informed Decision-making Proactive Fraud Prevention and Detection Figure 1: Advantages of Robust UK SOx Internal Controls wns.com 02

4. A Pathway to UK SOx Readiness Drawing from our own successful experiences in control transformation initiatives in the U.S. following the implementation of SOx, organizations stand to gain significantly by fortifying internal controls, especially in financial reporting. These benefits manifest across various levels and aspects of the organization by deploying a structured approach: 01 02 As part of this, you’ll need to review your existing resources and practices as well as the company's checks and approval systems relating to reporting and auditing to identify gaps that could make directors liable under the new regulations. CFOs and other directors must implement new controls on the processing and verification of financial data. These must be more sophisticated, accurate and timely than the existing versions. Addressing these gaps and upgrading your reporting and approval systems may require you to review your staffing and technological capability. UK SOx demands a mindset change not only within the finance function but across the organizational spectrum. You should treat it like a change management program. Your staff must change how they operate and accept greater managerial responsibilities. wns.com 03

5. 03 04 You must ensure that your teams are familiar with their individual responsibilities under the new regime and ready to revise their procedures. People training and effective communications across all teams in the research and implementation stage of UK SOx, as well as in the day-to-day operation of the new regime, is critical. This will be achieved by being aware of updates and amendments. To become fully compliant with UK SOx, CFOs, Chief Risk and Compliance Officers (CRCOs), heads of internal audit, financial controllers and other stakeholders in the finance function must leverage technologies like Artificial Intelligence (AI). AI-driven platforms can enhance proactive risk management by providing instant insights into spending behaviors, expenditure, cash flow forecasts, financial trends and potential policy breaches, offering real-time transparency and oversight. wns.com 04

6. AI's Role in Strengthening Risk Management for UK SOx Compliance CFOs and business leaders can harness AI for change management to prepare for UK SOx compliance, conducting risk assessments and designing new financial controls and frameworks (using AI insights). After the initial setup, AI facilitates ongoing governance and continuous improvement, offering real-time data, automated controls and language neutralization – especially beneficial for multi-national corporations. AI enables self-regulating accounting systems, such as auto-reconciliation with quality checks and automated summarization of financial data, enhancing fraud detection, audit analytics and reporting efficiency. wns.com 05

7. Drawing insights from in-depth consultations with clients and key industry stakeholders, WNS has curated an AI-driven Risk and Controls Implementation Framework. This framework can serve as a foundational element for companies embarking on their UK SOx rollout journey. WNS Risk and Controls (R&C) Implementation Framework AI-driven R&C Outcomes - Dynamic real-time data with live detection - Touchless processing with built-in system controls - Language neutralization - Auto-generated accounting with self-review - Auto-close reconciliations with quality parameter validation - Generative commentaries and summarization of findings - Fraud and revenue leakage detection - Audit analytics and reporting AI / Gen AI Augmentation Purpose Process / Policies Data Governance & Improvement Automation of Controls Testing / Reporting Scoping Risk Design Controls / Framework Assessment Change Management Resourcing Training Enhancement Figure 2: WNS AI-driven R&C Framework UK SOx will introduce major changes not only in financial reporting but, ultimately, in how companies run their accounting and finance functions. As AI develops, forward-thinking CFOs must take advantage of this exciting, rapidly evolving technology to mitigate risks and future-proof their businesses. To delve deeper into WNS' AI-driven R&C Framework and how strengthening internal controls can offer numerous advantages beyond regulatory compliance, talk to our experts. wns.com 06

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