Materialise: Enabling Belgian innovation on the road to SOX Compliance

Key messages

Internal Audit

SOX Compliance

design and deployment of internal control framework

Specialized engineering techniques such as “selective laser sintering”, “fused deposition prototype modeling” and “stereolithographic printing” are used by Leuven-based Materialise in its 3D printing business. Without rigorous legal and regulatory compliance such as adherence to Sarbanes-Oxley obligations (SOX), however, the company would be out of business in many markets. Validating SOX compliance provides insights into the company’s processes and performance improvement potential but also mitigates legal and regulatory risk.

Additive manufacturing

Materialise NV is a leader in the 3D printing industry. Sometimes called “additive manufacturing”, 3D printing is a computer-aided design and fabrication process in which objects such as machine components are produced through the successive addition of thin layers or particles of material. Additive manufacturing processes allow for more efficient use of inputs and reduced waste. With a current global market of around 10 Billion USD, overall sales of 3D printing technology are expected to increase 5-fold by 2024. With a 2018 revenue of 220M USD, it is an emerging player in the market and is listed on the NASDAQ.

“The company focuses on 3D imaging software combined with plastic molding to develop products for industrial, medical and dental industries as well as offering design software and prototype solutions to businesses around the world.” (Bloomberg)

Materialise was founded in 1990 in Leuven, Belgium, where its global headquarters are situated. Today, the company employs 1900+ employees deployed across 24 offices in 18 countries across the world. Since its inception, Materialise focuses on the development of additive manufacturing applications to serve the needs of a wide variety of industries, including healthcare, automotive, aerospace, art and design, and consumer products.

Listed on the NASDAQ

In 2014, Materalise issued an Initial Public Offering on the NASDAQ, the premier US index for technology-related stocks. For the protection of investors and others, publicly listed companies in the United States are required to comply with the stringent control and disclosure standards outlined in the Sarbanes-Oxley legislation and must file management attestations as to the soundness of the company’s internal control system.

SOX compliance

As a listed company, Materialise was required to comply with SOX. Considering the company's focus on growth, compliance issues are an added challenge, leading Materialise to seek support from CFO Services' Internal Audit & Control specialists. They were called in to enable the company’s Internal Audit Department to meet the obligation of assessing the internal control environment and executing the SOX filings before the 2019 deadline.

Designing the internal control framework

Our SOX consultant designed and deployed the internal control framework for the production and inventory operations at the main production facility in Leuven, Belgium. He did that in collaboration with Materialise Internal Audit, working hand in hand with process owners. Specifically, he implemented risk and control matricesstandard procedures and designed process flow charts. Training sessions were organized to help people understand and execute SOX compliance processes. The documentation and controls were then leveraged as best practices for the implementation of controls at Materialise entities throughout the world and to ensure the success of the company’s compliance efforts in 2019. Our consultant’s knowledge, skill and ability to adapt to the client’s challenging environment were key to ensuring effective and efficient execution of the SOX compliance processes.

Learnings from an innovative hi-tech environment

Working with Materialise provided a rare opportunity to work on the set-up of an internal control system in the innovative environment of a growing high-tech enterprise. The implementation of effective internal controls requires working closely with people who own the processes. It necessitates you to gain a clear understanding of they way the control steps impact the efficient execution of production and administrative processes. As a whole, the project provided a comprehensive overview of a rapidly evolving manufacturing technology.

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