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How to streamline SOX controls for Debt Covenant Compliance

How to use DataSnipper Snips to test three SOX debt covenant compliance attributes: Other Debts, Financial Information Certification, and Profitability.

Use DataSnipper for Excel to streamline SOX controls testing for debt covenant compliance. This example covers three key attributes: Other Debts, Financial Information Certification, and Profitability.

Video tutorial

What the video covers

How to use Text Snip, Sum Snip, Validation Snip, and Exception Snip to test three debt covenant compliance attributes, and how to structure a DataSnipper-enabled workbook for SOX control evidence.

Attribute 1: Other Debts

  1. Use Text Snip to extract the relevant covenant details from the bank agreement. Hold CTRL to snip multiple details into the same cell.

    Using Text Snip to extract covenant details from the bank agreement
    Holding CTRL to snip multiple covenant details into the same cell

  2. Navigate to the debt schedule and use Sum Snip to calculate the total outstanding debt, verifying it does not exceed the maximum principal amount in the agreement.

    Using Sum Snip to calculate total outstanding debt on the debt schedule

  3. If a discrepancy exists, use Exception Snip to flag the non-compliance.

    Using Exception Snip to flag a non-compliance discrepancy

Attribute 2: Financial Information Certification

  1. Use Text Snip with CTRL to extract the covenant details into the workbook for easy reference.

    Using Text Snip with CTRL to extract covenant details into the workbook

  2. Use Text Snip to capture the name of the CPA firm that audited the financial statements.

    Capturing the name of the auditing CPA firm with Text Snip

  3. Use Text Snip to capture evidence of the approval sign-off.

    Capturing evidence of the approval sign-off with Text Snip

  4. Use Validation Snip to confirm compliance requirements for this attribute are met.

    Using Validation Snip to confirm compliance for the attribute

Attribute 3: Profitability

  1. Use Text Snip to extract the relevant covenant language from the debt agreement.

    Using Text Snip to extract covenant language from the debt agreement

  2. Snip the pretax income figures for the required years from the annual report.

    Snipping pretax income figures from the annual report

  3. Use Validation Snip to confirm compliance with the profitability targets in the agreement.

    Using Validation Snip to confirm compliance with profitability targets
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