Saturday, October 16, 2004

Sarbanes-Oxley: Lack Of IT Controls Seen As Reason For Earnings Restatement

As a key Sarbanes-Oxley Act deadline looms, CIOs are coming to grips with the central problem of determining where financial controls leave off and IT controls begin. The problem isn't an academic one: Those companies that fail to learn the lesson could find their top execs behind bars.

Beginning Nov. 15, companies must, under section 404, include a statement attesting to the effectiveness of internal controls over financial reporting with their 2004 annual reports.

The point was driven home by this week's disclosure by SunTrust Banks that it is restating its earnings upward for the first two quarters of 2004 and delaying its third-quarter earnings statement because of improper accounting procedures in its auto finance division. The bank revealed that it had mistakenly used gross charge-offs instead of net charge-offs to compute its loan-loss reserves.

InformationWeek > Sarbanes-Oxley: Lack Of IT Controls Seen As Reason For Earnings Restatement

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