Region: Philadelphia
Industry: Pharmaceutical,Life Sciences
Service Line(s): Risk Management Services
Managed Sarbanes-Oxley documentation and testing of processes for the company's $4 billion R&D division.
“GlaxoSmithKline has made it a priority and a way of life to operate by the highest ethical standards. When, in 2002, Congress passed the Sarbanes-Oxley law, at GSK we wanted to make sure we were fully compliant quickly. Not only because it was the law but also because it was the right thing to do and it made good business sense. In GSK Research and Development, an organization with $4 billion in spending and more than 16,000 employees, we asked AC Lordi to help us with the requirements embedded in section 404 of the Sarbanes-Oxley law. Although the law was new to everyone, AC Lordi quickly provided us with knowledgeable, skilled and dedicated resources at a reasonable cost. They helped us through the documentation process and are still our resource of choice for the ongoing testing. With the help of AC Lordi, R&D was Sarbanes compliant by the end of 2004, one year ahead of the legal requirement for non-US based public companies.”
Kim Zahan, Director of Compliance for R&D Division
Company Background:
GlaxoSmithKline is a world leading, multibillion dollar research-based pharmaceutical company headquartered in the UK and employing more than 100,000 people in more than 100 countries.
Business Challenge:
GlaxoSmithKline's $4 billion R&D division established an initiative to fully comply with Sarbanes-Oxley regulations by the end of 2003. To complete this initiative within the desired timeframe, however, the company needed to develop a comprehensive plan for immediate implementation, then enhance its internal compliance function for ongoing developing, testing, and monitoring of controls.
AC Lordi Consulting Solution:
AC Lordi helped develop an initial plan for compliance, interviewed process owners, documented processes, identified and tested key controls, coordinated with external auditors, and reported to management on our findings. Our five-part COSO-based control evaluation approach provided management with a snapshot by process and sub-process of the risk universe, critical areas, process flows, and control points as well as a risk mitigation summary, gap listing, and remediation plan. We also helped inform personnel of the important aspects of complying with SOX and how it was going to affect them.
We assembled over 50 binders of control testing work papers, documented and continuously updated 26 financial processes, and coordinated management testing with over 60 internal GSK R&D employees. We have been asked to continue to work closely with the auditors on evolving Sarbanes issues, new process documentation and testing resulting from the ever evolving R&D division.
Value Delivered:
GSK R&D, with AC Lordi’s assistance, ended up the front running GSK division with respect to SOX compliance. The division was Sarbanes compliant by the end of 2004—one year ahead of the legal requirement.
Our phased approach to compliance ensured participation from GSK management and coordination with external auditors during each step so that deliverables were on time and on target, and costs were minimized. By educating the process owners about Sarbanes-Oxley and COSO, we were able to ensure complete cooperation and a smooth and successful compliance project. This helped the GSK R&D division stay ahead of the curve for Sarbanes-Oxley compliance. The company was so satisfied with the value we added during this engagement, that we are now working with them on a number of other finance and compliance related projects, including Sarbanes-Oxley ongoing quarterly testing of internal controls.