History Of Trinity Industries Passed Their Sox Compliance Essay

History Of Trinity Industries Passed Their Sox Compliance Essay

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Trinity Industries passed their SOX compliance in 2004 by applying the bottom-up approach in identifying the gaps and the lack documentation controls. Bottom-up approach looks at individual base elements of a system first and then those elements are linked together to form a larger subsystems. Trinity used this method to figure out where the material weakness for SOX compliance were and to organize a system to fix the problems. This process involved Trinity going into the BUs work environment, collecting information form the employees, observing the flow process, collecting data on the system gaps and documentation, correcting the weakness, and educating the employees in the correct process. Some of the weakness in this approach were, over testing controls, a lack of streamline controls, and the time and cost associated with the process. The strengths that helped Trinity overcome the material weakness in it controls by using this system are:
• Understanding where the weakness were in the BUs by going through the work process.
• Involvement of the employees at the lower level in the control process.
• Early testing to verify controls.
The top-down approach is a hierarchical framework and a macroeconomic, which top management use their knowledge, experience, and judgment to identify the areas that present material weaknesses. Top management then develop a plan to reduce these risks. Lower level employees are not involved in this process. The advantage of this type of approach is: looking at the big picture and planning out the solution. This approach could save money and time if top management have a lot of knowledge about how the company departments functions to create proper controls. However, if they miscalculate the controls,...

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• Perform gap-analysis for controls, remediate the gaps by educating the control owners.
• Develop a plan to correct each control gap
• Monitor and test the controls.
One of the most useful testing process that Trinity perform to validate its accounting system was correcting the material weakness of documentation controls. To have a process of management signature on inventory controls, reconciliations of various accounts, and monthly/quarterly financial statements. This process confirmed that controls were performed and the financial statement are correct and free of errors.
Trinity journey to pass the SOX compliance has been a long and expensive road. Trinity spend $2.5 million in 2004, $1.3 million in 2005, $1.2 Million in 2006, and $1.0 million in 2007. Between 2004 and 2007, Trinity control tested have decreased from 2440 to 505, internal testing

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