SOX
SOX Scoping
FY26 scoping for Northbridge Instruments, Inc.. Overall materiality $21.4M, with a 5% coverage threshold for significant accounts and a 10% threshold for locations.
Controls in scope
112
of 128
Review required
9
AI needs your judgment
Out of scope
7
Reasoning documented
Significant accounts
6
2 below threshold
Materiality & thresholds
- Revenue
- $4.28B
- Overall materiality
- $21.4M
- Performance materiality
- $16.1M (75%)
- Clearly trivial
- $1.07M (5%)
- Account threshold
- 5% of pre-tax income
- Location threshold
- 10% of revenue or inventory
Morgan · Audit Manager Agent
The Cerritos plant now represents 11.4% of consolidated inventory following the Halcyon consolidation, crossing the location threshold in methodology §4.2. Recommend bringing 14 inventory controls in scope, adding roughly 180 testing hours. Halcyon's own San Jose site remains excluded under the first-year acquisition exclusion.
Significant accounts & assertions
| Account | Balance | % of revenue | Assertions | Process | Scope |
|---|---|---|---|---|---|
| Revenue | $4,280M | 100% | Occurrence, Cutoff, Accuracy | Order to Cash | In scope |
| Accounts receivable | $742M | 17.3% | Existence, Valuation | Order to Cash | In scope |
| Inventory | $611M | 14.3% | Existence, Valuation | Inventory & Cost Accounting | In scope |
| Accounts payable | $388M | 9.1% | Completeness, Accuracy | Procure to Pay | In scope |
| Accrued compensation | $164M | 3.8% | Completeness, Accuracy | Payroll & Equity | In scope |
| Income taxes payable | $97M | 2.3% | Accuracy, Valuation | Tax Provision | In scope |
| Prepaid expenses | $31M | 0.7% | Existence | Financial Close | Out of scope |
| Other current assets | $18M | 0.4% | Existence | Financial Close | Out of scope |
Locations
| Location | Revenue | Inventory | Scope | Reasoning |
|---|---|---|---|---|
| Portland HQ (US) | 52.1% | 38.4% | In scope | Principal location, full scope |
| Cerritos plant (US) | 9.4% | 11.4% | Review required | Crossed 10% inventory threshold after Halcyon consolidation |
| Eindhoven (EMEA) | 21.6% | 24.2% | In scope | Significant location |
| Penang (APAC) | 12.8% | 19.7% | In scope | Significant location |
| Halcyon — San Jose | 4.1% | 6.3% | Out of scope | FY26 acquisition exclusion; in scope FY27 |
Control scoping recommendations
Sample of the FY26 recommendation set
| Control | Process | Type | Recommendation |
|---|---|---|---|
| R2C-014 | Order to Cash | Business process | In scope In scope — direct link to revenue occurrence, prior-year finding |
| R2C-002 | Order to Cash | Business process | In scope In scope — material judgment area |
| R2C-021 | Order to Cash | ITAC | In scope In scope — single-item testing permitted given effective ITGCs |
| P2P-008 | Procure to Pay | Business process | In scope In scope — fraud risk relevance |
| FCR-003 | Financial Close & Reporting | Business process | In scope In scope — compensating control for R2C-014 |
| FCR-011 | Financial Close & Reporting | Business process | In scope In scope — fraud risk, manual entries |
| INV-006 | Inventory & Cost Accounting | Business process | Review required Review required — Cerritos location newly above coverage threshold |
| ITGC-004 | NetSuite ERP | ITGC | In scope In scope — supports all automated controls in NetSuite |