Wednesday, January 19, 2005

Sarbox and IT: The Long Haul

With the last of the requirements of the Sarbanes-Oxley Act finally taking effect, it would have been easy to suspect that corporate America's drive to comply with corporate governance rules would be nearing completion. Yet finance executives who are leading the compliance charge say they do not expect to complete this work any time soon.

More than 60 percent of respondents to a recent survey by CFO Research Services and Capgemini identify regulatory compliance as a long-term rather than a short-term issue. True, many companies are wrapping up their initial efforts to meet the requirements of Section 404 of Sarbanes-Oxley, which requires that companies document and attest to the effectiveness of their internal financial controls. But many CFOs are still looking for long-term solutions to ensure that their control structure remains effective, recognizing that compliance promises to be an ever-evolving process as their organizations grow and change over time.

"Even if a business is relatively static, you have to guard against complacency to make sure your talent and your skills are sharp, to make sure that you are alert to possible breakdowns in controls, and to ensure that you pursue continuous improvement in controls and documentation," says Dan Farell, senior vice president for energy company TXU Corp., who is overseeing a broad-based business process outsourcing contract the utility recently entered into with an outside vendor. "We look at it as a continuous process," concurs Brendan Condon, senior vice president of finance and operations for America Online Media Networks (a unit of Time Warner). "Our view is to never assume that what you're doing is the best you can do."

Sarbox and IT: The Long Haul

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