Thursday, September 30, 2004

Policy Hub for Compliance: Fuego's Process Management (PDF)

A policy hub, the control point of a decision-making process, is a key element in supporting the management of compliance processes. This study illustrates this requirement by profiling Fuego, a provider of business process management system (BPMS) software. Fuego has taken its BPMS and developed supervisory control applications, one of which is targeted at automating and managing the controls over high-risk financial accounting and reporting processes in support of Sarbanes-Oxley. The strength of the Fuego approach is its process orientation, an implementation of IDC’s policy hub to address compliance.

Policy Hub for Compliance: Fuego's Process Management (PDF)

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IT Control Objectives for Sarbanes-Oxley (PDF)

The Sarbanes-Oxley Act has fundamentally changed the business and regulatory environment. The Act aims to enhance corporate governance through measures that will strengthen internal checks and balances and, ultimately, strengthen corporate accountability. However, it is important to emphasize that section 404 does not require senior management and business process owners merely to establish and maintain an adequate internal control structure, but also to assess its effectiveness on an annual basis. This distinction is significant.

For those organizations that have begun the compliance process, it has quickly become apparent that IT plays a vital role in internal control. Systems, data and infrastructure components are critical to the financial reporting process. PCAOB Auditing Standard No. 2 discusses the importance of IT in the context of internal control. In particular, it states: The nature and characteristics of a company’s use of information technology in its information system affect the company’s internal control over financial reporting.

To this end, IT professionals, especially those in executive positions, need to be well versed in internal control theory and practice to meet the requirements of the Sarbanes-Oxley Act. CIOs must now take on the challenges of (1) enhancing their knowledge of internal control, (2) understanding their organization’s overall Sarbanes-Oxley compliance plan, (3) developing a compliance plan to specifically address IT controls, and (4) integrating this plan into the overall Sarbanes-Oxley compliance plan.

IT Control Objectives for Sarbanes-Oxley (PDF)

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Mapping COSO and CobiT for Sarbanes-Oxley Compliance

Two control frameworks have been widely adopted by public companies subject to the requirements of the U.S. Sarbanes-Oxley Act of 2002: the Committee of Sponsoring Organizations of the Treadway Commission (COSO) Internal Control — Integrated Framework, released in 1992, and the IT Governance Institute's Control Objectives for Information and Related Technology (CobiT). Although the U.S. Securities and Exchange Commission (SEC) suggests that public companies consider the control components of COSO when seeking Sarbanes-Oxley compliance, neither the SEC nor the U.S. Public Company Accounting Oversight Board has openly endorsed a specific information technology control framework. Interestingly, as companies subject to the act's requirements get closer to first-year certification, more practical questions are being raised about the relationship and alignment between the COSO internal control framework and CobiT objectives.

Mapping COSO and CobiT for Sarbanes-Oxley Compliance

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Movaris to Provide Financial Control Management for Instinet Group

Movaris®, a leading provider of financial control management software, today announced that Instinet Group Incorporated [NASDAQ: INGP] has selected Movaris Certainty™ to manage its internal financial controls and Sarbanes-Oxley compliance requirements. As the largest global electronic agency securities broker through its affiliates, Instinet Group recognizes that their control environment will change, and will use the flexibility in Certainty to adjust and implement new control definitions while continually maintaining compliance.

Movaris Certainty not only documents the control definitions, but also records all changes and results of internal testing, creating a complete body of evidence about financial controls for both internal reports and the external auditors. The software also reminds participants to complete all required tasks correctly and on time, and it automatically escalates overdue tasks to management.

Press Release: Movaris to Provide Financial Control Management for Instinet Group

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Sarbanes Oxley Event: New York, 10/26/2004

Sarbanes-Oxley compliance is a key business issue for your customers. On October 26th in New York City, Ziff Davis will run a full-day event focused on business and technology regulatory issues with speakers from the President’s Corporate Fraud Task Force and the U.S. Securities and Exchange commission. To become a sponsor, please contact Martha Schwartz at (212) 503-5643 or martha_schwartz@ziffdavis.com.

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93% Of Corporate IT Executives Unaware of Their Sarbanes-Oxley Compliance Responsibilities, According to Recent Survey by Obian

Findings Suggest a Significant Percentage of Companies Likely to Fail 2004 Audit Because of Lack of Awareness

A recent survey by Obian, Inc. found that an astounding 93% of chief information officers and other senior IT executives were unaware of their information technology control assessment responsibilities as mandated under Section 404 of the Sarbanes-Oxley Act - a finding that suggests a significant percentage of companies will fail their 2004 corporate governance audit.

93% Of Corporate IT Executives Unaware of Their Sarbanes-Oxley Compliance Responsibilities, According to Recent Survey by Obian

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Thoughts from the Integration Consortium: Sarbanes-Oxley Act and IT: Why There is No "I" in "SOX Team"

Sarbanes-Oxley (SOX) compliance has become the number one issue facing CXO executives today. Compliance with the terms of the SEC's SOX Act of 2002 has become the number one pain point of most public organizations and boards of directors both in the U.S.A. and around the world. They are in a desperate race to ensure they have documented and tested a range of financial controls all to ensure the integrity of the financial number they make public at each year end and at each quarter. But the extensive and elaborate team of senior executives that meets once a week to discuss the progress of SOX compliance is often without a critical member of the team, the CTO or CIO. Information system executives are often left off the SOX compliance committees and teams simply because they are viewed as outside the realm of financial reporting.

Section 404 states in brief that executive managers and boards of directors of public organizations must acknowledge their responsibility for the financial controls within the organization and the accuracy of the financial information made public. Then they must provide an assessment of the effectiveness of these controls and have an auditor attest to this assessment. Section 409 stipulates that the same board and executives must disclose real-time information "concerning material changes in the financial condition or operations of the issuer including trends as the Commission determines necessary for the protection of investors and in the public interest." The ability to report real-time information and set controls to ensure the validity of financial information was thought by the SEC and the PCAOB to be fully within the realm of the financial professionals that posted the information. But they were wrong.

Thoughts from the Integration Consortium: Sarbanes-Oxley Act and IT: Why There is No "I" in "SOX Team"

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Auditors are Urged to Test Information System Integrity

Sarbanes-Oxley is clear: companies must have internal controls in place and the effectiveness of those controls must be audited. However, the law does not address the reliability of the company's information systems, which is now being addressed by the Securities and Exchange Commission, Dow Jones Newswires reported.

"We're leveraging our oversight role to encourage public accounting firms to look very closely at information-security controls of those companies," Chrisan Herrod, the SEC's chief security officer, said Tuesday during a conference on cybersecurity, which was reported by Dow Jones.

The SEC is asking auditors to look closely at information-security systems when assessing client companies' internal controls. Companies with fiscal years ending in November are among the first to be required by Sarbanes-Oxley to file an auditor's report on the effectiveness of their internal controls.

Auditors are Urged to Test Information System Integrity

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Quality Products Announces Change to Non-Reporting Status

In 2002, Congress passed the Sarbanes-Oxley Act and it imposed new requirements on public companies that report to the Securities and Exchange Commission (SEC). Some of these requirements have already taken effect. Other requirements, in particular the internal control analysis and reporting requirements of Section 404, are scheduled to take effect for Quality Products, Inc. by September 2005. We have been studying what we need to do to meet the various Sarbanes-Oxley requirements, and we have determined that the resources needed to comply are substantial, both in terms of money and additional responsibilities for our limited number of employees. Because of its onerous burden, the Board of Directors has considered other alternatives and has decided, unanimously, to become a non-reporting company. Becoming a non-reporting company will eliminate the expensive Sarbanes-Oxley reporting requirements and will save substantial costs estimated to be well over $300,000 during the first year and continued savings annually afterwards.

Quality Products Announces Change to Non-Reporting Status

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Business Objects Sarbanes-Oxley Analytic Solution Helps Businesses with Compliance and Risk Management

Business Objects, a leading provider of business intelligence (BI) solutions, announced the availability of Sarbanes-Oxley Analytic Solution, an application that enables companies to more effectively manage regulatory compliance. The new product is part of BusinessObjects Analytics, a suite of enterprise analytic applications that allow organizations to better understand their operations, customers, products, people and operations.

BusinessObjects Sarbanes-Oxley Analytic Solution enables organizations to increase financial transparency and perform root cause analysis, quickly identify and highlight process irregularities and take corrective action, and improve oversight of their internal controls structure. BusinessObjects Sarbanes-Oxley Analytic Solution allows financial managers to investigate the data represented in reports and trace the data source to its origins, which is a key capability for compliance.

Business Objects Sarbanes-Oxley Analytic Solution Helps Businesses with Compliance and Risk Management

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Security and Sarbanes-Oxley

Security professionals may soon find themselves fielding calls from their companies' upper management concerning the Sarbanes-Oxley Act.

Sarbanes-Oxley, named for the two Congressmen who sponsored it, on the surface doesn't have much to do with IT security. The law was passed to restore the public's confidence in corporate governance by making chief executives of publicly traded companies personally validate financial statements and other information.

President Bush signed on the law on July 30, 2002. Initially, companies had to be in compliance this fall, but extensions were granted. Large corporations now have until June 15, 2004, to meet the requirements of Sarbanes-Oxley. Smaller companies have to comply by April 15, 2005.

Congress passed the law in quick response to accounting scandals surrounding Enron and other companies. Sarbanes-Oxley deals with many corporate governance issues, including executive compensation and the use of independent directors. "When it was initially adopted, the last thing on their minds was security. The law was passed to address things such as off-book transactions," said Gary Saidman, an attorney specializing in information security matters with Atlanta-based law firm Kilpatrick Stockton.

Security and Sarbanes-Oxley

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Wednesday, September 29, 2004

Survey of CFO's Finds Value of Information Technology Goes Well beyond Regulatory Compliance

As businesses move beyond cost reduction and toward a growth agenda in 2004, Capgemini US LLC, a global leader in consulting, technology and outsourcing, found that prudent IT investments can help achieve balance sheet objectives, service level improvements, risk mitigation and management, performance management and cost leadership. According to a Capgemini survey of the more than 200 finance & technology executives attending CFO magazine's IT Value Conference, four in ten (40%) said their CFO's top priority in supporting strategic IT investment to meet business profit and growth goals was moving toward a "variable cost structure and adaptive IT architecture to change quickly to shifting business needs."

Nearly half of respondents (43%) indicated the best example of CFO/CIO collaboration to drive success throughout the organization is "using IT investment to break down functional silos in order to create process-driven, cross-functionally aligned enterprises," compared to another three in ten (32%) who pointed to the creation of a Portfolio Management Office approach to enterprise transformation. In addition, a solid majority (59%) of respondents indicate that organizations are spending what is needed to meet all compliance needs as opposed to imposing cost controls (41%) to meet Sarbanes-Oxley and other regulatory requirements and mandates.

Survey of CFO's Finds Value of Information Technology Goes Well beyond Regulatory Compliance

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KPMG Survey: Insurance Execs Less Optimistic

Even before the full impact of the recent hurricane activity is known, the majority of the 150 senior insurance executives surveyed are less optimistic about premium growth and the industry's ability to increase margins, according to KPMG LLP. Survey results also reflected that the amount of resources needed to address Sarbanes-Oxley compliance was far greater than anticipated a year ago.

Only 57 percent of the executives surveyed indicated they expect their firms to perform above expectations in the next 12 months, as compared to 70 percent a year ago. The survey also found that the number of executives who indicated that the Sarbanes-Oxley Act has had the greatest impact on the way they do business, increased to 83 percent up from 58 percent last year.

KPMG Survey: Insurance Execs Less Optimistic

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Sarbanes-Oxley Documentation for Administrators

Like most pieces of legislation, the Sarbanes-Oxley Act (known as SOX) is quite lengthy and involved. In a nutshell, all financial data and reports must be accurate, agreed to (and signed off on) by those who are paid to oversee them, and they must be maintained for historical and audit purposes.

IT figures into this equation in the section of the Act known as 404 (see http://www.sec.gov/news/press/2003-66.htm). This section implies that there should be internal controls on the data and reports to assure that they are safe, uncorrupted, accurate, and so on. If a company is large enough to be publicly traded, and it keeps its data on elaborate computer systems, then suddenly it is up to the administrator and IT department to be able to prove that measures are in place to keep the network secure and tojustify everything that is done to and with data.

It is not enough to know that data is secure, or even to say that it is secure — you must document that it is secure. Audits are then done to verify that the proper measures are in place to make certain the data is secure. The following tips will help you understand what should be documented.

Sarbanes-Oxley Documentation for Administrators

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OpenPages Announces New Sarbanes-Oxley Customer, Resolution Performance Products LLC

OpenPages, a leading provider of enterprise governance, risk and compliance management solutions, today announced that Resolution Performance Products LLC has selected OpenPages Sarbanes-Oxley Express (SOX Express) for its Section 302 and 404 compliance initiatives.

Resolution Performance Products LLC is the leading worldwide manufacturer and developer of epoxy resins and is also the leading global manufacturer of Versatic acids and derivatives. Epoxy resins are chemicals primarily used in the manufacture of coatings, adhesives, printed circuit boards, fiber reinforced plastics and construction materials. The company, with approximately 900 employees, has operations in the United States, Europe and Asia.

Resolution Performance Products LLC will deploy SOX Express to facilitate compliance with Sarbanes-Oxley requirements. It will enable the collection of information regarding ongoing business internal controls, deployment and monitoring. By combining a strong document repository with powerful compliance automation capabilities, SOX Express will be a strong tool for project management and compliance, using web-based tools to get users up to speed quickly.

OpenPages Announces New Sarbanes-Oxley Customer, Resolution Performance Products LLC

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Tuesday, September 28, 2004

Configuresoft Charters The Center for Policy & Compliance; Team of Experts Clarify and Support Requirements Around Policy Development & Compliance

Configuresoft, the industry leader in configuration management, today unveiled its Center for Policy & Compliance. The Center is comprised of a team of security and policy experts, IT auditors and early contributors to the Federal mandates and industry best practices. While Configuresoft's goal includes helping administrators better understand and evaluate the security of their network, the driving factor behind the Center is to help the market gain a better understanding of the tools that can help plan and implement automated strategies that effectively address regulatory and policy compliance issues.

The Center's two main programs include content research and delivery of productized knowledge via sets of compliance templates, reports and dashboards. Areas of focus include but are not limited to regulatory items, such as Sarbanes-Oxley (SOX), FISMA, HIPAA, GLBA, Basel II, and industry best practices/standards, such as NIST, CIS, SANS, ISO. The Center's first deliverable will be a turnkey solution for SOX compliance. It will include access control, audit control and access change monitoring. This will ensure a company's automated strategy for SOX compliance will consistently meet the mandate. Plans for a second package covering FISMA compliance is underway for later this month.

Configuresoft Charters The Center for Policy & Compliance; Team of Experts Clarify and Support Requirements Around Policy Development & Compliance

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Tools: IBM Lotus Workplace for Business Controls and Reporting

Learn how IBM Lotus Workplace for Business Controls and Reporting helps provide a platform for an organization's business reporting process and an organized approach to gathering information about business controls, including controls over financial reporting. By leveraging KPMG's industry insights and knowledge of internal control processes and practices via the KPMG Control Catalogs, or other third-party catalogs, you can get started quickly. It's not simply a matter of meeting new requirements but rather about streamlining business processes. Built on open J2EE standards, Lotus Workplace for Business Controls and Reporting role-based Web application offers companies a way to close gaps while leveraging current infrastructure. IBM provides an end-to end solution from a single vendor to help support requirements of Sarbanes Oxley 404 legislation. No other company has the breadth of experience, technology and services to help companies meet the new requirements.

Tool: IBM Lotus Workplace for Business Controls and Reporting

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Creating a Compliance Management Culture

Technology managers need to understand that they can't rest after ensuring their companies comply with Section 404 of the Sarbanes-Oxley Act. Like it or not, the flood of regulations has only just begun.

Industry, state, federal and international regulations related to IT will multiply over the next few years, industry analysts say. That means its vital that CIOs and other technology leaders create processes and architectures that make it easier to comply with new regulations.

The good news is that most enterprises already possess the technology needed to meet this new challenge.

''Companies shouldn't merely comply with new regulations -- they should use them for business improvement,'' says Joe Rizzo, a principal with Deloitte Consulting's CIO Advisory Services group. As examples, he cites some Sarbanes-Oxley requirements, such as those addressing access control. Sarbanes-Oxley mandates that enterprise software developers cannot have access to production systems, so that applications under development cannot be slipped into production before they're fully tested. ''That's just good business practice,'' Rizzo says.

Creating a Compliance Management Culture

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Paisley Consulting and Hudson Financial Solutions Join Forces to Provide Sarbanes-Oxley Software and Solutions

Paisley Consulting, a leading provider of business accountability software, and Hudson Financial Solutions, a practice group of Hudson Global Resources and provider of end-to-end solutions for complex financial issues, will work in partnership to offer services and software to clients implementing mandated Sarbanes-Oxley compliance programs.

Paisley Consulting's Focus(TM) Control Assurance Software is designed to help companies maintain accountability and responsibility for specific tasks and projects and to provide localized documentation and necessary certification of data associated with the compliance process. Hudson Financial Solutions will utilize Focus to assist CFOs, controllers and key financial leaders in designing and implementing comprehensive Sarbanes-Oxley compliance initiatives, from project scope and documentation through testing, remediation and ongoing monitoring.

Together, the companies will pursue mutual business opportunities integrating established project management methodologies with flexible management of resources and information. As part of a Hudson-Paisley Consulting SOX consulting solution, clients will pay reduced licensing fees and receive enhanced technical support.

Paisley Consulting and Hudson Financial Solutions Join Forces to Provide Sarbanes-Oxley Software and Solutions

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Companies Deciding Big Four Seal of Approval Not Worth the Cost

With audit fees skyrocketing and a highly complex portion of Sarbanes-Oxley coming due for implementation, many companies are leaving Big Four accounting firms for smaller audit shops where they can get more attention at less cost, USA Today reported.

Audit Analytics, which tracks the audit industry, reported that the Big Four firms-Deloitte, KPMG, Ernst & Young, PricewaterhouseCoopers (PWC) lost more audit clients than they gained in the first eight months of this year, with two-thirds of the 396 auditor separations involving Big Four firms.

Companies Deciding Big Four Seal of Approval Not Worth the Cost

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Captara Corporation Announces Sarbanes-Oxley Reporting Solution for Capex Finance Obligations

Captara Corporation, a provider of business process management solutions for capex finance, today announced the availability of its Sarbanes-Oxley Reporting Application. Among other requirements, the Sarbanes-Oxley Act demands that a company's annual and quarterly reports disclose all material off-balance sheet financial obligations and amounts due under specified contractual obligations such as lease arrangements, loans and other debt instruments.

The Captara solution delivers visibility into and control of the complete capex finance lifecycle, from policy creation and deployment to compliance monitoring and reporting. Key reports include disclosure of capital leases, operating leases, loan payments and other material disclosures, enabling compliance with FASB and Sarbanes-Oxley. Other reports include transaction listings, notification summary, asset management, lender transactions, evergreen warnings, and payment summaries.

Captara Corporation Announces Sarbanes-Oxley Reporting Solution for Capex Finance Obligations

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Monday, September 27, 2004

Sarbanes-Oxley as an IT-business alignment driver

If something affects the business -- be it emerging competition, shifts in market demand, process re-engineering, or government regulations -- then it affects how the business' computing systems are managed. The Sarbanes-Oxley regulations are a perfect example. When the law was passed in 2002, most enterprises viewed it as an issue for their auditors and financial officers. But lo and behold, in October 2003, the Public Company Accounting Oversight Board proposed an auditing standard (PCAOB; Release No. 2003-017) that states "the nature and characteristics of a company's use of information technology in its information system affect the company's internal control over financial reporting."

Surprise, surprise! IT does matter in how the business is run -- at least that's how government regulators see things.

Sarbanes-Oxley as an IT-business alignment driver

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Shareholder Litigation Against Foreign Companies on the Rise in 2004

"The number of securities litigation cases filed against non-U.S. companies listed on U.S. markets will most likely continue to increase. Closer cooperation between U.S. and foreign regulators, and more frequent reviews of foreign filings as required by Sarbanes-Oxley, will result in increased exposure for companies," said Grace Lamont, Securities Litigation partner, PricewaterhouseCoopers and author of the study. "The unknown consequences of reporting on internal controls under Sarbanes-Oxley Section 404 and the conversion throughout Europe to International Financial Reporting Standards in the next year represent other potential areas of risk where companies could fall foul of laws and regulations. Larger settlement values can also be anticipated in the future."

Shareholder Litigation Against Foreign Companies on the Rise in 2004

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Frances, SOX and Inevitability

As the November 15 deadline looms for SOX compliance, Big Four firms have been working overtime with their larger audit clients on their financial reporting systems to meet that date.

As a result, the combination of manpower shortages and cost-efficiency has prompted the global firms to, well, jettison smaller (read: less profitable) clients in favor of their larger blue-chip counterparts.

Now you didn't have to cover, or, for that matter work, in the profession very long to see this trend coming, but apparently, Donald Nicolaisen, the chief accountant the Securities and Exchange Commission, is a bit concerned.

He castigated the firms for "running away from the marketplace" and urged them not to use SOX as "a convenient tool" to manage their businesses.

When SOX was first signed into law, many accounting and financial publications (including ours) featured articles and numerous consultant predictions that this was going to be the future of auditing for SEC issuers.

Frances, SOX and Inevitability

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USATODAY.com - More firms flee Big Four accountants

Cost is the main reason for the shift. Audit fees were already rising, thanks to greater demands in new regulations. Many fear fees could really take off this year, because an especially onerous part of Sarbanes-Oxley, Section 404, takes effect for many companies. The rules require auditors to conduct expensive tests of a company's accounting controls to make sure there are safeguards to stop the books from getting cooked.

Better access to top accounting professionals also is a factor. Given the complex new accounting rules, many companies want ready access to the partner in charge of the audit, says Leland Graul, director at BDO. The Big Four, which rely heavily on recent college grads, assign a partner to every 10 to 12 employees, he says. BDO has one partner to every six, he says.

USATODAY.com - More firms flee Big Four accountants

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.: UBmatrix - Technologies and integrated solutions enabling automated data exchange, validation

The Federal Deposit Insurance Corp., the agency that insures banks, is a customer. Every quarter, FDIC member banks send financial statements to the FDIC. The agency spends 60 to 75 days every quarter manually inputting data and performing audit checks. With the UBmatrix approach, the process now can take 10 days. Blackstone said that when the program goes fully live next year, it will take just one day.

Smaller scale: Companies can also buy software from UBmatrix that makes it easier to gather data that complies with GAAP, or generally accepted accounting principles, which public companies use to report financial performance.

Accounting rules: UBmatrix tools can make it easier for companies to comply with the Sarbanes-Oxley Act, which requires companies to use methods that ensure data can be audited at a certain level.

UBmatrix - Technologies and integrated solutions enabling automated data exchange, validation & analysis

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Saturday, September 25, 2004

Accountants, in demand, seeing hefty pay hikes

What is causing the fight to keep auditors is like a force of nature, said Caturano. Public companies, now exposed to increased financial-reporting requirements as a result of the federal Sarbanes-Oxley Act, are hiring mid-level accountants to work in-house. Those accountants have between two and seven years experience and come from the audit, not tax, side of a firm's practice.

At the same time, there is a shortage of accountants with that experience. While the pipeline of accountants coming out of college is strong, it was weak toward the end of last decade, and it will take a few years before more people get the experience to fill those ranks, experts say.

Moreover, accounting firms find themselves in the same position as corporations: They are forced to do more audit work with the same staff.

"It's like the perfect storm," Caturano said. "More than ever is the shortage in mid-level (accounting) prevalent."

Accountants, in demand, seeing hefty pay hikes

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SEC gets a second try on Gemstar exec pay / Agency says funds should be frozen during fraud probe

A federal appeals court in San Francisco gave the Securities and Exchange Commission another chance Friday to make its case for blocking big corporate payments to executives who are under investigation for securities fraud.

The case involves one of the SEC's important new powers under the Sarbanes-Oxley Act of 2002, Congress' response to corporate scandals. The provision authorizing the agency to seek temporary escrow of extraordinary payments to a publicly traded company's employees during a fraud investigation was intended to keep the money available for possible fines or repayment.

SEC gets a second try on Gemstar exec pay / Agency says funds should be frozen during fraud probe

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Friday, September 24, 2004

SEC May Help Businesses With Accounting

Securities regulators are considering ways to help small businesses cope with strict new corporate accounting and internal control rules, a senior Securities and Exchange Commission official told lawmakers Thursday.

In testimony to a House Financial Services subcommittee, SEC corporation finance division director Alan Beller said regulators are looking at ways they might "recalibrate" regulations for smaller firms.

Congress didn't exempt small companies from tough new requirements contained in the Sarbanes-Oxley Act of 2002, and Beller told lawmakers that improving corporate governance, accounting and financial controls "is important for all companies, regardless of size."

SEC May Help Businesses With Accounting

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Cybermation: Socking it to SOX and ISO 17799

In the past few years we've witnessed a fundamental shift in attitude towards computer security in regards to the controls we put on business. Previously, it seemed acceptable to patch things together in a makeshift manner, as long as it worked well enough and helped the company profit.

That all changed with the financial irregularities that besieged some major companies and led to their eventual downfall. What were once monolithic corporations that would never face bankruptcy did. One of the issues that the scandals helped to spotlight was the need to have stricter controls on how corporations engage in business with other firms and within themselves.

The ability to trace and audit these activities was addressed at the highest levels, particularly with the advent of the Sarbanes-Oxley (SOX) Bill of 2002. As of June 15th, 2004, most public companies must meet the requirements of SOX and smaller companies along with foreign companies within the U.S. must have them met by July 15th, 2005.

Cybermation: Socking it to SOX and ISO 17799

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Follett Corporation Selects OpenPages SOX Express for Sarbanes-Oxley Compliance

OpenPages, a leading provider of enterprise governance, risk and compliance management solutions, today announced that Follett Corporation has selected OpenPages Sarbanes-Oxley Express (SOX Express) for evaluating and managing its internal controls.


With annual revenue in excess of $1.9 billion, Follett is a leading provider of educational solutions, services and products that empower schools, libraries, colleges, students and life-long learners. Through the Follett Higher Educational Group, Follett operates campus bookstores across the United States and Canada and is a leading provider of used college textbooks. Through the Follett Library and School Group, Follett provides K-12 schools and public libraries with a wide variety of books, ebooks, and audiovisual materials. The Follett Library and School Group is also a leading provider of library automation solutions for K-12 schools and the largest provider of K-12 textbooks.

Follett will deploy SOX Express to streamline its internal control documentation process enterprise-wide. SOX Express will enable the collection of information regarding ongoing business controls deployment and monitoring. By combining a strong document repository with powerful compliance automation capabilities, SOX Express will facilitate both project management and compliance, using web-based tools to get users up to speed quickly.

Follett Corporation Selects OpenPages SOX Express for Sarbanes-Oxley Compliance

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Thursday, September 23, 2004

European Companies Taking a Faltering Approach to Sarbanes-Oxley

A.R.C. Morgan has released the findings of their European Companies Sarbanes-Oxley Benchmarking survey - the survey indicates that more than 69 percent of European companies interviewed are only at the very early stages of planning their Sarbanes-Oxley section 404 project. The survey also reveals that European companies are not paying heed to the whistleblower provision of the Sarbanes-Oxley Act. The results of this Benchmarking Survey should cause alarm within Board Rooms of those European companies that must comply with the Sarbanes-Oxley Act.

European Companies Taking a Faltering Approach to Sarbanes-Oxley

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Reports from the Sarbanes-Oxley Front Lines

"Our auditors appear to be on the extreme side. Effective September 20, DBAs aren't allowed to hold administration rights in production because we're also considered developers. If a DBA needs access to the production environment, they have to wait for the Help desk to generate a work order, then request the ID from the network administrators (hopefully they're not busy at 2 a.m. when a job fails). And then there's all the logging we have to do now. At this point, we have over 20 logs that must be checked and acknowledged daily; by month end, it's likely to exceed 50. The joke around here is that we are going to have to start a new department with the sole purpose of reviewing the logs each day. The 'separation of duties' isn't a bad thing if you're fortunate to have a large IT department. But with seven people supporting offices in six states, there aren't enough heads for all the new hats."

The Sarbanes-Oxley auditors for this reader's firm have decided that they simply won't let production DBAs have the sa password. I wish this was a crazy, silly, extreme example, but I suspect that Dilbertian episodes like this one will become more common as more companies begin comprehensive Sarbanes-Oxley compliance activities. Another reader shared this scenario:

"We were just wrung through the Sarbanes-Oxley wringer here. And in my opinion, the effort was a total waste of time. The auditors didn't know what they were supposed to do, and they missed a lot of things that would have benefited from a closer audit scrutiny. Important concerns were either given a cursory look or totally ignored, while auditors focused on 'important' financial bottom-line stuff like "How often do you change passwords?" and "Where do you store your backup drives?" Those are certainly valid IT audit concerns, but I kept asking them "How does this affect our corporate financial statements?" It seems to me that auditors with lots of axes to grind went way overboard in using Sarbanes-Oxley as a big stick to get their way on certain things."

Reports from the Sarbanes-Oxley Front Lines

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Sarbanes-Oxley: Accountants Setting IT Policy?

Will your accountant be setting corporate IT policy sometime soon? My recent articles about using SQL Server Profiler during application development raised a lot of interest in and debate about how to give developers controlled access to Profiler (and the requisite sa password) in production and quality assurance (QA) environments without giving away the keys to the kingdom. And some readers said they're particularly concerned about how the U.S. Public Company Accounting Reform and Investor Protection Act of 2002, aka the Sarbanes-Oxley Act, will affect their IT environments. Although Sarbanes-Oxley doesn't regulate information technology, IT is the foundation for the financial processes that the law regulates.

Do you have any idea what Sarbanes-Oxley legislation means to your IT department? The above comment came from a reader whose organization's IT security policy is being set by a team of auditors who, quite frankly, aren't trained to implement proper security measures. I spoke off the record with a colleague who has a fair amount of experience helping companies design Sarbanes-Oxley compliance plans. He said that some internal and external auditor groups are being overly aggressive in their interpretation of certain sections of Sarbanes-Oxley. These different interpretations can lead to inconsistencies where one group of auditors tells a company, "Yes, Bob can have the sa password," and another set of auditors tells the company, "Heck no, Bob can't have the sa password."

Sarbanes-Oxley: Accountants Setting IT Policy?

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From 'Can't' to Compliant

The dreaded Section 404 of Sarbanes-Oxley takes effect in December, requiring companies to document in detail how they do business—and then disclose those details. Are you ready?

Most companies aren't, according to an Institute for Internal Auditors (IIA) survey of its members. The survey showed that as of Feb. 8, an astonishingly low 1.9% were fully compliant with Sarbanes-Oxley rules, and another 14.6% had only begun their assessment. Even if the bulk of those companies finish on time, lots of enterprises will be left with their assets hanging in the breeze.

How ready are you for compliance? Download the PDF and take our self-assessment quiz.

From 'Can't' to Compliant

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Wednesday, September 22, 2004

Privacy Is Overrated - Executives at publicly held companies insist they want to take their firms private. They're lying.

Corporate America is whining about costs associated with the Sarbanes-Oxley Act, the regulatory bill passed in the wake of the corporate scandals. A study released last week by the law firm Foley & Lardner found that 21 percent of public firms surveyed said they were considering going private "as a result of new corporate governance and disclosure reforms." Business Week's May 24 issue suggested that smaller companies are avoiding the public stock markets, perhaps hindering capital formation.

But while many executives are bitching about the costs of Sarbanes-Oxley, few are doing anything about it. If being a public company were really so troublesome post-Sarbanes-Oxley, managers, being rational creatures, would be taking their companies private at a rapid rate. And they'd be shying away from taking private companies public. The data shows neither is happening. Since Sarbanes-Oxley went into effect, more than twice as many companies have gone public as have gone private.

Privacy Is Overrated - Executives at publicly held companies insist they want to take their firms private. They're lying.

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Corporate Governance Reforms Manageable and Permanent, According to Global Survey of Senior Executives

The recent reforms of corporate governance standards have been broadly accepted by senior business leaders worldwide, according to Corporate Reputation Watch (CRW), Hill & Knowlton's annual survey of global management on business reputation issues. According to the study, corporate leaders have overcome their initial misgivings about the potential administrative and financial burdens of complying with the requirements of the Sarbanes-Oxley era.

Only eight percent of senior executives surveyed believe that the task of complying with the new financial disclosure and corporate governance standards poses a real challenge to running a competitive business, while almost half (45 percent) say the compliance burden is "heavy but manageable." Expressing no misgivings about the compliance requirements, 48 percent say that the burden is "reasonable." Moreover, almost two-thirds of those surveyed believe that it is no more difficult to recruit board members today than it was before the new governance reforms were adopted.

Corporate Governance Reforms Manageable and Permanent, According to Global Survey of Senior Executives

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Will Sarbanes-Oxley Compliance Leave a Hole in Your Budget?

Identifying how all of your company's processes work is supposed to be a benefit of going through the rigor of complying with the Sarbanes-Oxley Act, which is designed to curb financial fraud among U.S. corporations. But is the practical effect of Sarbanes-Oxley compliance to make a company less efficient, rather than more?

Most likely, yes. At least if you're CarrAmerica Realty, a $570 million-a-year real estate investment trust based in Washington, D.C.

The company's technology shop this year gave back $750,000 of its $12 million budget because it didn't have time to pursue initiatives aimed at improving its efficiency. The culprit: Sarbanes-Oxley compliance. The 40-person staff didn't have time to pursue both.

"We had to focus so many things on Sox,'' says Susan Gerock, the senior director of systems integration and support at CarrAmerica. "We had budgets for projects and had to give back the budgets."

Will Sarbanes-Oxley Compliance Leave a Hole in Your Budget?

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Coldwater Creek Selects OpenPages SOX Express for Sarbanes-Oxley Compliance

OpenPages, a leading provider of enterprise governance, risk and compliance management solutions, today announced that Coldwater Creek (NASDAQ: CWTR) has selected OpenPages Sarbanes-Oxley Express (SOX Express) for its Section 302 and 404 compliance initiatives.

Coldwater Creek is an integrated multi-sales channel retailer of women's apparel, jewelry, footwear, gift items and accessories through a growing number of full-line retail stores located in major metropolitan areas, an e-commerce web site at www.coldwatercreek.com, and direct-mail catalogs.

Coldwater Creek will deploy SOX Express to streamline its internal control documentation process across all of its locations. It will enable the collection of information regarding ongoing business controls deployment and monitoring, resulting in a reduction of compliance costs. By combining a strong document repository with powerful compliance automation capabilities, SOX Express will facilitate both project management and compliance, using web-based tools to get users up to speed quickly.

Coldwater Creek Selects OpenPages SOX Express for Sarbanes-Oxley Compliance

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Microsoft ready to make more big acquisitions, says CFO

Connors went on to say that that Microsoft does not have much trouble meeting the compliance rules such as Sarbanes-Oxley Act of 2002, but there should be relief for smaller companies. Sarbanes-Oxley is a set of corporate disclosure and financial reporting rules for companies that are traded publicly in the US.

"For large organisations that have the resources the amount of time spent on this by senior-level people is more diffused than in a smaller organisation. So it is disproportionate for a small public company in terms of senior management time spent on this act and its compliance," Connors said.

Microsoft ready to make more big acquisitions, says CFO

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Sarbanes-Oxley Moves EHS Auditing From the Backroom to Boardroom

The role of Environmental, Health & Safety (EHS) auditors and the information they assess is currently undergoing a sea change. Traditionally, EHS auditors have assessed company-specific information using company-specific metrics for use by an internal audience within the company. Recent developments, such as the passage of Sarbanes-Oxley (SOX) and increased adoption of the Global Reporting Initiative (GRI), are broadening the scope of both information collection and modes of data delivery, as well as the audience.

EHS professionals addressed this dynamic earlier this month in Philadelphia at the annual Auditing Roundtable conference, entitled The Role and Practice of EHS Auditing in a New Era of Corporate Governance and Management Systems. EHS auditing is overseen by the Board of Environmental, Health & Safety Auditor Certifications (BEAC), a joint venture between the Auditing Roundtable and the Institute of Internal Auditors (IIA).

Sarbanes-Oxley Moves EHS Auditing From the Backroom to Boardroom

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Tuesday, September 21, 2004

Private Companies Voluntarily Adopting Sarbanes-Oxley Provisions

To gauge the accuracy of conventional wisdom, FEI and Baruch queried private companies this quarter on their attitudes towards Sarbanes-Oxley. Results indicate it is being embraced by private companies. Almost 60% of surveyed private companies plan to comply with at least some aspects of Sarbanes-Oxley (see list on page 3 for more detail). The reasons cited by those who are complying at least in part are that "it's a better way to run a
business," 61%; "they anticipate it will apply eventually to private
companies," 52%; and "stakeholders should be treated like public investors," 35%. (More than one response was allowed).

Of the private companies that might consider going public, over half (54%) say Sarbanes-Oxley will not deter them. In contrast, 20% are holdouts, saying they will not go public because of the requirements.

Private Companies Voluntarily Adopting Sarbanes-Oxley Provisions

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FrontRange Solutions' HEAT Supports Sarbanes-Oxley Compliance; FrontRange's Partners Help SME Customers Use HEAT to Meet SarbOx Objectives

Public companies that must comply with the Sarbanes-Oxley Act of 2002 (SarbOx), can now tap the HEAT(R) IT Service Management software from FrontRange Solutions, the leader in Service Management and Customer Relationship Management(CRM) solutions for distributed and small to mid-size enterprise(SME). HEAT's capabilities help SMEs meet the stated objective of SarbOx to "protect investors by improving the accuracy and reliability of corporate disclosures made pursuant to the securities laws."

For many SME companies, the most challenging component of SarbOx compliance is Section 404, which requires that management file an internal control report demonstrating adequate internal controls over financial reporting have been established and maintained. Section 404 also requires that management report their assessment of the effectiveness of these internal controls. External auditors are then obliged to provide an independent opinion or attest to the adequacy of these controls.

FrontRange Solutions' HEAT Supports Sarbanes-Oxley Compliance; FrontRange's Partners Help SME Customers Use HEAT to Meet SarbOx Objectives

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Accounting students in high demand

Sarbanes-Oxley federal legislation has introduced new accounting requirements that have increased demand for accountants, and a recovering economy also has driven demand. Students are aware of that demand, and it's drawing more of them into accounting majors, as is the knowledge that accounting can serve as a good base for business in general, Schultz said.

"Sarbanes-Oxley is the accounting full-employment act," said Ron Kucic, director of the school of accounting at DU's Daniels College of Business. And demand for more accounting work isn't just at publicly traded companies, to which Sarbanes-Oxley applies, but also at private companies, which are coming under pressure from lenders, investors and others to meet Sarbanes-Oxley standards.

The number of firms recruiting on the DU campus this year has picked up to eight or nine, from a typical six firms in the past. Accounting firms have "more work than they know what to do with," Kucic said.

Another problem for large accounting firms is their loss of good people to private industry, which tends to pay better and offer more reasonable hours. That means they've got to fill those spots.

Accounting students in high demand

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Sarbox: Spur to Foreign-Company Flight?

Section 404, in particular, might be causing a number of overseas companies to take the difficult step of deregistering with U.S. regulators.

A number of foreign companies traded publicly here are reportedly willing to take the step of deregistering with the Securities and Exchange Commission in order to shed Sarbanes-Oxley compliance burdens..

A handful of non-U.S.-based companies have chosen to de-list from U.S. exchanges according to The Wall Street Journal. Their decisions have come before governance provisions like Sarbox Section 404 go into effect next year for foreign-based companies that are listed in the United States.

Sarbox: Spur to Foreign-Company Flight?

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Monster.com reports surge in area ads

Besides sales, occupations seeing higher interest from Philadelphia-area employers are in information technology, with postings up 68 percent from a year ago; accounting and auditing, up 46 percent; and administrative and support, up 27 percent.

The rebound in information technology is a welcome development for an industry that has struggled to recover from the dot-com bust and the loss of some jobs to outsourcing. The demand for accountants and auditors is driven, in part, by the Sarbanes-Oxley Act of 2002 passed in the wake of the Enron Corp. and WorldCom Inc. scandals.

Monster.com reports surge in area ads

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Monday, September 20, 2004

Reconnex Introduces Program to Help Companies Rapidly Gain Control of Compliance Liabilities

Reconnex, a pioneer in the development of high performance enterprise security solutions designed to reduce the costs and damage associated with disclosures of confidential information, today announced a new program as part of the company's compliance service offerings. The e-Risk Rapid Assessment program determines whether companies are in compliance with industry regulations and provides an unprecedented view into a company's intellectual and private information to protect competitive advantages and detect attacks against critical information repositories. Using the e-Risk Rapid Assessment program, companies across various industries can quickly gain visibility into the disclosure of their sensitive information and map these disclosures back to compliance violations The program quickly reveals the areas in which companies are not in compliance by tying together the disclosures of confidential information to key industry regulations including the Health Insurance Portability and Accountability Act (HIPAA), Gramm-Leach-Bliley Act, California SB 1386 and Sarbanes-Oxley Act.

Reconnex Introduces Program to Help Companies Rapidly Gain Control of Compliance Liabilities

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OpenPages SOX Express Purchased by Lloyds TSB for Sarbanes-Oxley Compliance

OpenPages, a leading provider of enterprise governance, risk and compliance management solutions, today announced that Lloyds TSB Bank plc has purchased its Sarbanes-Oxley Express (SOX Express) product to help manage and report on compliance with Section 404 of the Sarbanes-Oxley Act.

OpenPages' SOX Express is an enterprise compliance management solution that reduces the time and resource costs associated with ongoing compliance for Sections 302 and 404. SOX Express is a focused enterprise application that combines powerful document and business process management with flexible reporting capabilities in an extremely easy-to-use environment that enables CEOs, CFOs and financial management officers to enforce internal controls. SOX Express helps corporations automate significant aspects of their internal controls framework to significantly reduce the overall cost of compliance. Its dashboards can be used by project managers, documentation team members, internal auditors and external auditors to plan, document and test the internal controls of the company, and eventually to attest to the financial statements.

OpenPages SOX Express Purchased by Lloyds TSB for Sarbanes-Oxley Compliance

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Hardly Ready for Sarbanes-Oxley

Inside the sleek office towers of Corporate America, far from the façade that most businesses present to outsiders, publicly traded companies are racing against the clock. Their task: To comply with some of the most far-reaching federal regulatory changes they've ever faced -- and to do so before yearend. Many execs find their stomachs churning.

Section 404 of the Sarbanes-Oxley Act, which passed in July, 2002, in the wake of major corporate scandals, requires that management of any large public company that ends its fiscal year on Nov. 15, 2004, or later, assess its internal controls over financial reporting. These are the nitty gritty of procedures that govern actions such as issuing checks and recording sales. Then, companies must hire independent auditors to "attest" to the accuracy of management's report. Both management's and auditors' assessment must make it into the annual report for 2004.

Hardly Ready for Sarbanes-Oxley

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Huttig Building Products, Inc. Selects Movaris for Sarbanes-Oxley Compliance and Financial Control Management

Movaris® a leading provider of financial control management software, today announced that Huttig Building Products, Inc. [NYSE: HBP], a distributor of building materials, will use Movaris Certainty™ to manage its internal financial controls and for its Sarbanes-Oxley Act compliance requirements. Huttig selected Movaris Certainty for its ease-of-use, control documentation and action plan capabilities for both Section 404 and Section 302 compliance, as well as for ongoing financial control improvement. Prior to selecting Movaris Certainty, Huttig utilized a software tool developed by one of the “Big 4” accounting firms, but sought a full-function application for better management of their financial controls as well as ongoing Sarbanes-Oxley Act compliance.

Huttig Building Products, Inc. Selects Movaris for Sarbanes-Oxley Compliance and Financial Control Management

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Excellence in Corporate Governance

The Excellence in Corporate Governance online program will examine the rules and regulations by which companies must abide to protect their organizations and stockholders. Specific topics addressed will include: issues facing boards of directors and audit committees; financial reporting; internal control reporting by management (Section 404 of Sarbanes-Oxley); management responsibilities; legal implications; and implementation and execution practices. Certified public accountants participating in the courses can receive continuing professional education (CPE) credit.

Excellence in Corporate Governance

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How Many Vendors Does It Take To Comply With Sarbanes-Oxley?

I’m flying back from the Oracle Applications User Group (OAUG) meeting and reflecting back on two days of hearing the scoop from real users on their successes, trials, and tribulations in applying Enterprise Resource Planning (ERP) technology. A popular topic with both users and vendors was compliance with the federal rules regarding corporate accounting and accountability contained in the Sarbanes-Oxley Act (SOX).

The Bottom Line: Companies are now realizing the long-term implications of ongoing SOX compliance and expecting auditors to tighten the requirements as they learn more.

How Many Vendors Does It Take To Comply With Sarbanes-Oxley?

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Saturday, September 18, 2004

INTELLIGO, Inc. - Sarbanes-Oxley

The sense of urgency to comply with the 2004 and 2005 compliance deadlines of the Sarbanes-Oxley Act makes Intelligo's services and products in Sarbanes-Oxley (SOX) compliance critical to the success of a software implementation.

Intelligo's products and services can help you meet the Sarbanes-Oxley Act requirements for identifying what financial documentation you produce and how you produce it. We can also help you with the SOX requirement for documenting internal controls.

INTELLIGO, Inc. - Sarbanes-Oxley

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Small clients dropped

Deloitte & Touche LLP, KPMG LLP and Ernst & Young LLP have dropped at least eight small U.S. audit clients in the past seven weeks, raising the concern of the Securities and Exchange Commission's chief accountant.

The Big Four accounting firms, Deloitte, Ernst, KPMG and PriceWaterhouseCoopers LLP, say they are overworked as they help their biggest and most profitable clients meet a Nov. 15 deadline to improve financial reporting systems under the Sarbanes-Oxley law. The SEC is worried that the auditors may be using the law as an excuse to abandon some smaller audit jobs.

Small clients dropped

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Friday, September 17, 2004

Despite Early Protests, Foreign Firms Flock to PCOAB

Although foreign accounting firms bristled at Sarbanes-Oxley Act provisions requiring them to seek approval from regulators in Washington in order to audit the financial statements of U.S. companies, they are now flocking by the hundreds to register with the Public Company Accounting Oversight Board.

Of the 1,319 registrations processed by the board through mid-September, more than one-third are from non-U.S. firms, PCAOB registration and inspections director Patricia Thompson said. More foreign firms are expected to register, even though the official deadline for doing so passed on July 19, she said in a report to the PCAOB’s public meeting on Wednesday.

Despite Early Protests, Foreign Firms Flock to PCOAB

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Executing an IT Audit for Sarbanes-Oxley Compliance

Concluding her two-part series on handling Sarbanes-Oxley compliance, Michelle Johnston explains how to audit your organization: My previous article in this series described how to prepare your organization for auditing. Now we'll delve into the audit itself—what's involved, and how to survive it.

Ultimately, Sarbanes-Oxley makes executives responsible for ensuring that these controls are in place and effective, and this fact is making Sarbanes-Oxley a high priority on most companies' agendas: Executives are aware that they could go to jail if these processes are not in place and/or are ineffective. Suddenly, executives are very interested in what's going on in the murky depths of the IT department!

Executing an IT Audit for Sarbanes-Oxley Compliance

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Part of the grind

When the Securities and Exchange Commission originally published its Sarbanes-Oxley rules to establish professional conduct for attorneys representing companies before the SEC, the legal profession began spewing its reactions - some pro, but mostly con.

Many attorneys saw the new regulations as a threat to the sacrosanct attorney-client privilege, and the SEC since has modified them, making them easier to swallow, local attorneys say.

Part of the grind

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Looking back: More vendors rolling out Sarbanes-Oxley software

Last Summer, Computerworld ran an article entitled More vendors rolling out Sarbanes-Oxley software. Among the software solutions profiled were Open Pages, Protiviti, Oracle, and Concur. What has changed in a year? Have any of these solutions gained a definitive hold in the market? Are any of those products helping you currently?

We would love to hear about it.

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Thursday, September 16, 2004

U.S. Companies Consider Going Private to Skirt Sarbanes Oxley

"Any company under $100 million in revenues has to be asking itself whether it's worth it to stay public,'' said Brent Longnecker, president of Longnecker & Associates, a Houston-based consulting firm for executive compliance and corporate governance. He estimates that the cost of being public has risen more than 150 percent over the past year because of the new federal regulations.

Longnecker said he knows of six small private companies that dropped plans to go public and four small public companies in the South and Midwest that have requested analysis of the pros and cons of going private, as a result of the Sarbanes-Oxley law. A major reason for higher costs is the new requirement to audit internal controls -- an area that accountants previously neglected because it might trigger lawsuits against them if audit clients went bust.

U.S. Companies Consider Going Private to Skirt Sarbanes Oxley

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Potential SOX Delays, other SEC Updates

Questions arise as we get closer to the November 15, 2004 start date for SOX compliance, with SEC insiders and companies alike wondering if there is enough time left to get affairs in order. Read more at Accounting Today


Visit the SEC website for releases on Sarbanes Oxley implementation, and other considerations.
http://www.sec.gov/spotlight/sarbanes-oxley.htm
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