Thursday, December 30, 2004

Sarbanes-Oxley: Corporate boon and bane

The past year has seen U.S. corporate culture come full-circle from the dark days of Enron out into the Sarbanes-Oxley sunshine, but not without some of the growing pains that come with such a dramatic metamorphosis.

The 2002 Sarbanes-Oxley Act was set up to pull down the last buffers between corporate executives and corporate financial responsibility. Now, CEOs and CFOs have to sign off on all company quarterly and yearly financial statements, directors have to come from outside the company, and companies have to do not only a comprehensive audit of their internal financial controls against fraud and other financial skullduggery, but must also have outside auditors evaluate the internal audit.

Although only public companies had to tighten up their financial controls, in the post-Enron environment, even private companies adopted SOX standards to shore up their reputations. But other private firms saw the cost of compliance as an obstacle to ever going public, while some public companies said that they were strongly considering "going dark" or delisting, a survey by Chicago-based law firm Foley and Lardner LLP showed.

Sarbanes-Oxley: Corporate boon and bane

Tell us what you think. (0) comments.
Send to a friend:   

Compliance: Fear and loathing in 2004

This year, it's likely that IT managers would trade in all their holiday gifts to get the compliance grinches, I mean regulators, off their backs.

Compliance regulations such as the Health Insurance Portability and Accountability Act (HIPAA) for patient records and the Sarbanes-Oxley Act of 2002 (SOX) for financial records changed the way companies managed their data in 2004. Regulated companies spent a lot of time and money figuring out what data it had and what it needed to keep.

This led to confusion and anxiety because compliance language is not IT specific and better suited for lawyers and auditors. Many IT departments were left scratching their aching heads over compliance -- simply doing their best to manage, protect and archive their data.

But on the bright side, the effort to get compliant did help many IT departments put their shops in order and, in some cases, helped business and IT communicate better.

Compliance: Fear and loathing in 2004

Tell us what you think. (0) comments.
Send to a friend:   

Monday, December 27, 2004

Corporate reform architect warns against convergence

The leading architect of European corporate governance reforms has warned against pushing cross-border convergence faster than the market dictates.

Jaap Winter, chairman of the high-level group of company law experts whose recommendations lie behind the European Commission's drive for better standards, said practices were changing “relatively fast”. He added: “In all member states things are happening, codes are produced, legislation is changed, boards are starting to operate differently.”

Scandals such as those at Parmalat, the Italian dairy company that collapsed under 14bn (pounds) ($19bn) of debt, Ahold, the Dutch retailer, and Royal Dutch/Shell's reserves debacle have given reforms fresh impetus. Mr Winter, a Dutch lawyer, said there was a “sense of urgency that things must be transparent, that conflicts of interest must be dealt with, that non-executives have a real role to play”.

He warned, however, that the objective should not be to force Europe's varied systems of finance, share ownership and governance to converge. “Convergence is OK where companies are operating under very similar circumstances. It should probably be stimulated but we should be sensitive to differences that still exist and are relevant. I don't think we should start pushing for convergence in those areas.”

Corporate reform architect warns against convergence

Tell us what you think. (0) comments.
Send to a friend:   

Thank you, Sarbanes-Oxley

How's this for irony? Three auditors who lost their jobs when Arthur Andersen folded in the wake of the Enron scandal now find themselves up to their ears in work. They're auditing local businesses that are racing to meet Sarbanes-Oxley regulations devised to prevent another fraud like Enron.

But that's not all.

The co-founders named their San Jose firm Blueback, the nickname for the blue forms that Andersen's auditors used to detail their clients' accounting flaws.

And co-founder Kim Le's last name is pronounced ``Lay.'' That's right, like Ken Lay, Enron's deposed chief. (Who could blame her for telling people it sounds like snack-maker Frito-Lay instead?)

Le, 32, says she never considered leaving Andersen in the eight years she worked in its San Jose office. In the end, she had no choice. The crumbling accounting giant sold its audit arm while she was on maternity leave with her first child in 2002.

Thank you, Sarbanes-Oxley

Tell us what you think. (0) comments.
Send to a friend:   

Firms See Profit Boon in Sarbanes-Oxley

Though Wall Street executives might bemoan a new set of accounting rules that go into effect next year, analysts on Thursday hailed the law responsible for them as a financial windfall for firms that will help corporate America come into compliance.

The Sarbanes-Oxley Act - created in 2002 to tighten corporate governance after the Enron debacle - has become a boon to the profits of a handful of firms that provide professional accounting and finance services.

One recent example of this is Resources Connection Inc., a Costa Mesa, Calif.-based company whose shares surged Thursday after it reported that second-quarter earnings leapt 233 percent from last year do to heavy demand for Sarbanes-Oxley compliance. The company posted earnings of $15.6 million, or 62 cents per share, up from $4.4 million, or 19 cents per share, in last year's second quarter.

"There are a lot of companies that found the time and cost of compliance to be greater than expected, but on the flipside (for) any professional services firm it has created a perfect storm of demand," said Resources Connection chief financial officer Stephen Giusto. "All of the big four firms are maxed out helping clients comply, we're busy helping clients comply, and it is still remarkable how many companies are still working very hard to complete their requirements."

Firms See Profit Boon in Sarbanes-Oxley

Tell us what you think. (0) comments.
Send to a friend:   

Forbes.com: Sarbanes-Oxley Confessionals

Dedicated readers of The Wall Street Journal are used to the full-page notices addressed to shareholders that either polish someone's image or solicit their support in a battle for corporate control.

This Tuesday, however, a whole new type of notice appeared--this time with the unlikely sponsorship of PricewaterhouseCoopers. The notice bears the eye-catching caption, "Public Trust Is About To Be Tested Again." Now, anyone with more than ten cents in the market knows these are words that will get more than one investor's pulse rate rising (just think Enron and Worldcom). Add to this that the words are coming from the public's mainstay for trust--namely the company auditors--and you really wonder what's afoot.

The purpose of the notice is to warn investors that the Sarbanes-Oxley Act is about to drop the other shoe. Specifically, under Section 404 of the Act, independent accountants are required to give their opinion on whether the company has material control weaknesses, which "could" cause a misstatement of results in the annual, or interim, financial statements. This is required even if there is no evidence that such a misstatement has happened or will happen.

Forbes.com: Sarbanes-Oxley Confessionals

Tell us what you think. (0) comments.
Send to a friend:   

Thursday, December 23, 2004

Sarbanes-Oxley Confessionals

Dedicated readers of The Wall Street Journal are used to the full-page notices addressed to shareholders that either polish someone's image or solicit their support in a battle for corporate control.

This Tuesday, however, a whole new type of notice appeared--this time with the unlikely sponsorship of PricewaterhouseCoopers. The notice bears the eye-catching caption, "Public Trust Is About To Be Tested Again." Now, anyone with more than ten cents in the market knows these are words that will get more than one investor's pulse rate rising (just think Enron and Worldcom). Add to this that the words are coming from the public's mainstay for trust--namely the company auditors--and you really wonder what's afoot.

Sarbanes-Oxley Confessionals

Tell us what you think. (1) comments.
Send to a friend:   

Wednesday, December 22, 2004

Security workers praise Sarbanes-Oxley

Many security workers feel that government regulations aimed at protecting IT networks from threats are working, according to new survey.

The survey, released Wednesday by security services company RedSiren, indicates that many IT professionals view security guidelines as work-intensive. But they also believe the regulations--such as the Sarbanes-Oxley Act, HIPAA (the Health Insurance Portability and Accountability Act) and the Gramm-Leach-Bliley Act--are making a difference.

Of the 300 IT professionals interviewed for the study, 66 percent agreed that the government regulations have improved the overall security of the networks they work on.

On the flip side, many of the people surveyed said the federal regulations eat up a bulk of their working hours, leaving less time for other security-related projects.

Sixty-two percent of respondents said they now spend more time complying with regulations than addressing other security-related matters, and more than 38 percent said this demanding work has caused them to scale back other IT security projects.

Security workers praise Sarbanes-Oxley

Tell us what you think. (0) comments.
Send to a friend:   

Auditors Issue Joint Framework for Evaluating Internal Control Deficiencies

The nine firms issued version 3 of their framework for evaluating exceptions and deficiencies resulting from the evaluation of internal control over financial reporting. Version 3 of the framework has been expanded to cover the evaluation of deficiencies in pervasive controls other than information technology general controls and how to consider and evaluate deficiencies in the aggregate as well as incorporating the evaluation of process/transaction-level and information technology general control exceptions and deficiencies included in previous versions of the framework. The framework is designed for the use of issuers and auditors. This is to be the final update to the framework.

Auditors Issue Joint Framework for Evaluating Internal Control Deficiencies

Tell us what you think. (0) comments.
Send to a friend:   

Tuesday, December 21, 2004

Diminishing Returns

Governance: Philosopher Frederic Bastiat famously observed that all economic actions have consequences seen and unseen -- as in those wrought by Sen. Paul Sarbanes and Rep. Michael Oxley. Sarbanes, D-Md., and Oxley, R-Ohio, authored the landmark 2002 legislation that seeks to bring more accountability to corporate governance after the Enron and WorldCom bankruptcies.

And judging from the dearth of recent scandals, as well as the howls from executive offices and boardrooms about costs of compliance, the statute is certainly having observable effects.

As for unintended consequences, most are still to be quantified. These include decisions deferred, risks not taken and investments not made for fear of running afoul of the law's onerous rules.

Some consequences are already clear -- as a recent decision by China's flagship airline illustrated. Due in part to what foreign firms view as Sarbanes-Oxley heavy-handedness, Air China came public not on America's premier exchange in New York, but on London's.

Until now, the NYSE has gotten more than its share of big China deals. Thirty companies based on the mainland or in Hong Kong and Taiwan now trade on the Big Board. Among them are three of the biggest IPOs in the last year or so -- China Life Insurance, China Netcom and Semiconductor Manufacturing International.

Air China's $1 billion offering was the first big China deal that the NYSE didn't land of late. A good question for Messrs. Sarbanes and Oxley, as well as other politicians eager to rein in business, is whether it will be the last.

Diminishing Returns

Tell us what you think. (0) comments.
Send to a friend:   

SEC Rethinks Sarbox and Small Companies

The Securities and Exchange Commission is clearly sensitive to the plight of smaller companies that are struggling to comply with new corporate governance rules that apply to large and small companies alike.

Earlier this month the SEC gave many of these smaller companies an extra 45 days to meet a number of the requirements of Section 404 of the Sarbanes-Oxley Act, which guides how auditors report on companies' assessments of their internal controls.

Now the SEC has created an advisory committee to help examine the impact of that landmark legislation and other federal securities laws on smaller public companies. "The Sarbanes-Oxley Act has already been of enormous benefit to America's investors and markets and will spur further improvements," said SEC chairman William Donaldson. "Now the time is ripe to review how the act, including areas like internal control reporting, and other aspects of the SEC's regulations affect smaller companies."

SEC Rethinks Sarbox and Small Companies

Tell us what you think. (0) comments.
Send to a friend:   

Survey Conducted by Jaeckle Fleischmann and Mugel Reveals That Not-for-Profits Have Begun Making Changes in Response to Sarbanes-Oxley

Jaeckle Fleischmann and Mugel, LLP, a law firm with offices in Buffalo, Rochester, Amherst and New York City, conducted a survey during the fourth quarter of 2004 of Directors and executive officers of not-for-profit organizations related to their corporate governance practices. The survey, conducted in light of proposals that have been made at both the federal and the state levels to significantly tighten the rules by which not-for-profits are governed and operated, was completed by over 100 not-for-profit organizations headquartered throughout New York State, with a significant number based in the New York City area.

Significantly, a total of 36% of respondents reported that their organizations have made changes in response to Sarbanes-Oxley with respect to their governance structures and policies. In addition, 35% of respondents indicated that they anticipate making future changes as a result of Sarbanes-Oxley. A copy of the full survey report can be found on the Firm's website at www.jaeckle.com. In response to the results described above, James J. Tanous, Chairman stated, "Even though Sarbanes-Oxley, for the most part, does not apply to not-for-profits, not-for-profits, as they should, are nevertheless beginning to take steps to comply with certain of its provisions. The changes we are seeing in the area of not-for-profit governance are a reflection of increasing sensitivity to the need for good governance in the wake of corporate scandals of recent years and the impact of the standards set forth in Sarbanes-Oxley."

In addition, the survey revealed significant findings with respect to the changes that not-for-profits have made in response to the two provisions of Sarbanes-Oxley that currently apply to not-for-profits: Section 802, which prohibits the destruction of documents under certain circumstances and Section 1107, which protects employees who report suspicious activities (i.e. whistleblowers). Not-for-profits should demonstrate compliance with these provisions by adopting records retention/document destruction and whistleblower policies. However, 61% of respondents reported that they still have no whistleblower policy and 30% reported they have no records retention or document destruction policy. In response to these results, Vincent P. Ravaschiere, Of Counsel to Jaeckle Fleischmann & Mugel stated, "As a best practice, not-for-profits should create and enforce document destruction and whistleblower policies. Doing so is a cost-effective way to ensure compliance with Sarbanes-Oxley."

Survey Conducted by Jaeckle Fleischmann & Mugel Reveals That Not-for-Profits Have Begun Making Changes in Response to Sarbanes-Oxley

Tell us what you think. (0) comments.
Send to a friend:   

Corporate IT security takes off to address Sarbanes-Oxley, GLBA, HIPAA in '05

This year Sarbanes-Oxley, GLBA, HIPAA, accounting scandals, and Corporate Governance issues have increased concerns about liability in corporate America. This has sharpened the interest in security within both commercial companies and Government agencies. However, in 2005, it will be commercial corporations who take a fresh look at security issues.

The outgrowth of the new focus on limiting liability will translate into higher sales of security solutions outside of government, with a focus on following best-business practices for IT security, and on proven solutions. Security validations (such as Common Criteria and FIPS 140-2) will become increasingly important. New initiatives will develop that attempt to define measurable and testable requirements for meeting the IT security needs of HIPAA.

Corporate IT security takes off to address Sarbanes-Oxley, GLBA, HIPAA in '05

Tell us what you think. (0) comments.
Send to a friend:   

BearingPoint Warns on Controls

A month after the departure of its chief financial officer, BearingPoint Inc. said in a regulatory filing that it may be unable to complete all of the work necessary to present its report on internal controls required by Section 404 of the Sarbanes-Oxley Act or to conclude that its internal controls are effective.

BearingPoint added that while it expects to complete its evaluation and testing of its internal controls by the time it must file its 10-K for the year ending December 31 — due no later than March 16, 2005 — if "we have any material weakness, we will not be permitted to conclude that our internal controls are effective."

Even if the company had time to take remedial actions that corrected the material weakness by year-end, BearingPoint added, the remediated controls would probably not be in operation long enough to allow its auditor, PricewaterhouseCoopers, to conclude that they are effective. That makes it likely that PwC will provide either an adverse or disclaimed audit opinion, added the consultancy.

BearingPoint Warns on Controls

Tell us what you think. (0) comments.
Send to a friend:   

Deceit revealed in Japanese companies

An investigation by Japan's Financial Services Agency has found that one in 10 listed Japanese companies deceived investors in financial statements, undermining the credibility of Japan's stock market and denting the country's reputation as an international financial centre.

In response to the crisis, the FSA is considering new governance rules, based on the US Sarbanes-Oxley Act, which would force listed companies to spell out how they guard against wrongdoing. The rules could give Japan one of the toughest compliance regimes in the industrialised world but are likely to be resisted by companies because they would increase operating costs.

The FSA has suggested that executives be forced to document internal management controls, which could push many companies into updating or implementing compliance systems for the first time in years.

Deceit revealed in Japanese companies

Tell us what you think. (0) comments.
Send to a friend:   

Monday, December 20, 2004

Life Support: Trapped like a rat

Has your company made you take a computer course in business integrity? If not, it probably will. It is mandated for many companies by a new federal law called the Sarbanes-Oxley Act, which arose in response to recent financial scandals. The theory behind the Sarbanes-Oxley Act appears to be that because CEOs are crooked, you need ethics lessons.

I have just finished taking mine here at The Washington Post. I passed. I thought I would give you a quickie instructional course in how to pass this sort of test, too.

Life Support: Trapped like a rat

Tell us what you think. (0) comments.
Send to a friend:   

LaserCard Corporation Actively Seeking New Accounting Firm

LaserCard Corporation (NASDAQ:LCRD) today announced that it is actively seeking a new outside accounting firm in light of KPMG LLP's unexpected and sudden resignation on December 14, 2004. KPMG LLP informed LaserCard that it does not have the staff to provide services due to turnover and the unanticipated heavy workload for Sarbanes-Oxley 404 attestation work for large companies with fiscal years ending December 31. The company's fiscal year ends March 31st.

"We are obviously disappointed by KPMG's decision, but it appears that the Sarbanes-Oxley-related 45-day extension which the SEC recently granted to certain companies for internal control attestation resulted in a shortage of KPMG personnel resources available for a mid-sized company like us with a March 31 fiscal year-end," said Steve Larson, chief financial officer of LaserCard Corporation. "We are evaluating accounting firms and plan to make a decision on a successor shortly."

LaserCard has not yet decided whether to continue using KPMG Deutsche-Treuhand Gesellschaft to audit its German operations.

LaserCard Corporation Actively Seeking New Accounting Firm

Tell us what you think. (0) comments.
Send to a friend:   

Sarbanes-Oxley Training Gets Web-Enabled

When KPMG established its 404 Institute (an extension of its Audit Institute) in September, its goal was to provide help for companies striving to meet the November 15 deadlines on financial reporting and internal controls under The Sarbanes-Oxley Act of 2002. Next, the 404 Institute launched and publicized its "Countdown to Compliance" program, designed to provide corporate executives with online resources to help meet these and other compliance deadlines.

In a fall Web survey, KPMG found that the main short-term compliance issue for responders was learning more about compliance needs, expectations and requirements. So, as part of the Countdown aimed especially at companies that close their books after November 15, the 404 Institute is hosting a series of educational and informational programs, including webcasts with recognized industry experts and Web-based presentations on compliance issues.

Implicit in the changes brought about by Sarbanes-Oxley is the time-pressured demand for knowledge of accounting and governance reforms for those required to respond to the regulations. Just in time, elearning has overcome some of its early technical and delivery obstacles, and education delivered electronically has become a crucial option for executives and directors hustling for learning the new guidelines in a hurry.

Sarbanes-Oxley Training Gets Web-Enabled

Tell us what you think. (0) comments.
Send to a friend:   

Compliance: Fear and loathing in 2004

This year, it's likely that IT managers would trade in all their holiday gifts to get the compliance grinches, I mean regulators, off their backs.

Compliance regulations such as the Health Insurance Portability and Accountability Act (HIPAA) for patient records and the Sarbanes-Oxley Act of 2002 (SOX) for financial records changed the way companies managed their data in 2004. Regulated companies spent a lot of time and money figuring out what data it had and what it needed to keep.

This led to confusion and anxiety because compliance language is not IT specific and better suited for lawyers and auditors. Many IT departments were left scratching their aching heads over compliance -- simply doing their best to manage, protect and archive their data.

But on the bright side, the effort to get compliant did help many IT departments put their shops in order and, in some cases, helped business and IT communicate better.

Compliance: Fear and loathing in 2004

Tell us what you think. (0) comments.
Send to a friend:   

MSNBC: Latest Sarbanes-Oxley requirement draws mixed reviews

Dave Johnson isn't convinced that the work required to comply with the Sarbanes-Oxley Act of 2002 is worth the cost or effort.

"It's a great deal of work" at both the corporate level and at Sypris Solutions Inc.'s subsidiaries, said Johnson, Sypris' chief financial officer. "It is quite onerous."

The requirements, more commonly known as Section 404 of the law, include establishing that a company has internal policies and procedures to guard against fraud and hiring an outside auditor to verify those findings.

Those safeguards are a potential benefit of the legislation because they could make publicly traded companies stronger. But executives and accountants who are knee-deep in compliance said they are unsure that the end justifies the means -- and the work that comes with it.

The Section 404 requirements take effect this year, meaning that officials at public companies with more than $75 million in market capitalization must sign documents saying that their internal controls are strong and have been tested with their first reports in 2005. Then, starting in 2005, executives at public companies below that threshold must make the same disclosures.

"My personal opinion is that the second wave of compliance will be better prepared than the first wave," said Neal Spencer, partner-in-charge of the Louisville/Southern Indiana region of BKD LLP, a Springfield, Mo.-based accounting firm. "This is so new to everybody, and there is not really any blueprint of how to do this."

MSNBC: Latest Sarbanes-Oxley requirement draws mixed reviews

Tell us what you think. (0) comments.
Send to a friend:   

PCAOB to investigate KPMG audit

KPMG is reportedly being investigated by the Public Company Accounting Oversight Board into its audits of mortgage finance company Fannie Mae.

The investigation, according to the Financial Times newspaper, will examine whether the Big Four firm breached auditing rules in its work on Fannie Mae.

Fannie Mae is already under investigation by both the Justice Department and the Securities and Exchange Commission.

It faces a $9bn restatement following a Security and exchanges Commission ruling that it had violated accounting rules between 2001 and 2004.

PCAOB to investigate KPMG audit

Tell us what you think. (0) comments.
Send to a friend:   

Sarbanes-Oxley Act Could Punish Executives

Thanks to a two-year-old corporate responsibility law, regulators and directors have powerful new tools at their disposal if their investigations uncover misconduct at Fannie Mae.

Congress passed the Sarbanes-Oxley Act of 2002 after top executives at scandal-ridden companies, including Enron Corp. and WorldCom Inc., said they were unfamiliar with the details of company accounting practices that resulted in devastating losses by investors.

The law requires chief executives and financial officers to certify the accuracy of corporate financial statements.

Officials who "willfully" sign off on faulty financial reports knowing they are incorrect could be sentenced to 20 years in prison and fined $5 million.

Sarbanes-Oxley Act Could Punish Executives

Tell us what you think. (0) comments.
Send to a friend:   

PCAOB Said to Be Investigating KPMG Audit of Fannie Mae

The Public Company Accounting Oversight Board has reportedly opened an investigation into KPMG's audits of mortgage finance company Fannie Mae.

The board last week authorized its enforcement staff to scrutinize KPMG's work, according to a report by The Financial Times. The PCAOB investigation will reportedly look into whether the Big Four firm breached auditing rules in its work on Fannie Mae. KPMG became Fannie's auditor in 1969.

KPMG, through a spokesperson, declined to comment on the PCAOB investigation. A spokesman for the PCAOB said, "It would be inappropriate to comment on any action the PCAOB may or may not take regarding a specific company." Fannie Mae did not respond to a request for comment.

Fannie Mae, which is already under investigation by both the Justice Department and the Securities and Exchange Commission, also faces a possible $9 billion restatement following a review by the SEC that found that it violated accounting rules related to deferred purchase price adjustments and derivatives and hedging activities between 2001 and mid-2004.

PCAOB Said to Be Investigating KPMG Audit of Fannie Mae

Tell us what you think. (0) comments.
Send to a friend:   

Reassuring Answers (washingtonpost.com)

After the disclosure of accounting problems at Freddie Mac last June, Fannie Mae chief executive Franklin D. Raines defended the company's practices in statements and answers to interviewers' questions.

Accurate Accounting: Should investors have confidence that they have your personal assurances?

"Well, they've got it in writing. That's one of the things that's happened now since the Sarbanes-Oxley Act that CFOs and CEOs have to personally certify to their financial statements. And so we go to a great effort to every quarter, to satisfy ourselves that we have in place the kinds of internal controls necessary to make that kind of certification."

Reassuring Answers (washingtonpost.com)

Tell us what you think. (0) comments.
Send to a friend:   

Delistings soared in '03, study says

The number of companies that delisted common shares from exchanges nearly tripled in 2003, according to a study that suggests many companies did so to avoid increased outside scrutiny.

About 198 firms delisted their shares from exchanges, or "went dark," in 2003, up from 67 in 2002, according to the study co-authored by professors from the Wharton School of the University of Pennsylvania and the University of Maryland's Robert H. Smith School of Business. The study was summarized in a Wharton newsletter.

The study reported that most of the companies that delisted their shares say they did so to escape the steep costs associated with regulatory filings. Many smaller companies estimated the cost of complying with Sarbanes-Oxley was as high as $500,000.

Delistings soared in '03, study says

Tell us what you think. (0) comments.
Send to a friend:   

Saturday, December 18, 2004

BearingPoint Warns of Continued Turmoil, Acknowledges Subpoena

BearingPoint Inc. disclosed more troubles yesterday, saying that it will take a restructuring charge of as much as $67 million and may not be able to report that it has adequate procedures in place to prevent accounting fraud.

The "dilutive event raises concerns that the business maybe more troubled than previously thought," said analysts from Wachovia Securities, which downgraded the company's stock to "underperform" yesterday.

The offering is intended to give BearingPoint more liquidity, said Paul Hsi, an analyst with Moody's Investors Service. But, he added, it will also increase its overall debt.

"We've been tracking it very closely and have been sort of disappointed in terms of their ability to hit our expectations," Hsi said of the company.

The offering would reduce the chances that BearingPoint might be declared in default of existing credit agreements. A default would be triggered if the company failed to file an audited financial statement, which might occur if it is unable to meet financial accounting standards under the Sarbanes-Oxley Act. The act requires companies to certify that they have adequate accounting controls in place to prevent fraud. BearingPoint said it found a "material weakness" in its accounting procedures as recently as Nov. 19, and will likely find at least one more by the end of the year.

BearingPoint warned that even if it does implement changes, "it seems clear that there will be insufficient time" for the company's independent accountants to conclude that the new procedures are working and sign off on its financials.

BearingPoint Warns of Continued Turmoil, Acknowledges Subpoena

Tell us what you think. (0) comments.
Send to a friend:   

Friday, December 17, 2004

White Paper: Ensure business controls and regulatory compliance

IT service level management has shifted from being an eventual goal to being a business requirement. Under the Sarbanes-Oxley Act, companies must ensure their business controls can both operate efficiently and meet risk effectively. HP can help you bring customer service management strategies up to the exacting standards required in an environment where IT services are both complex and critical to the business. HP presents a practical approach to Sarbanes-Oxley compliance in our white paper offered below.

Register with HP to access the white paper entitled, "HP IT Service Management and HP OpenView: An approach to attaining Sarbanes-Oxley compliance." This white paper will explain how HP OpenView and HP ITSM combined with the structural frameworks of COSO and COBIT, can assist companies both in attaining Sarbanes-Oxley compliance and achieving key business objectives.

White Paper: Ensure business controls and regulatory compliance

Tell us what you think. (0) comments.
Send to a friend:   

Balance Sheet: The limits of expertise

So, without further ado: What anxieties can investors expect to surface as they seek information and assurance to aid their decisions? And if those concerns are as legitimate and well-grounded as they seem, then whose responsibility is it to allay them?

On the regulatory side, questions of efficacy persist - for example, on the likelihood that the reports by corporate management on internal controls, under section 404 of the Sarbanes-Oxley law, will add anything other than extra cost to the quality of corporate governance.

The U.S. Securities and Exchange Commission recently decided to grant smaller listed companies a 45-day extension on compliance, a gesture that will be of little value, since under existing law any control problems amounting to a "material weakness" - that is, big enough to matter - must already be disclosed, addressed and resolved.

More directly, ominous warnings resound about the prospects of a U.S. government bailout of the mortgage finance duo Fannie Mae and Freddie Mac, under fire for the application of their accounting policies. There are also alarms sounding about the very solvency of the Pension Benefit Guaranty Corp., whose obligations to stand behind the system of private pensions are about to be overwhelmed under the bankruptcy effects of the U.S. airlines.

Not only investors, lenders and business partners, but also employees, pensioners and home borrowers have delegated portions of their personal risk assessment to these third-party sources of assurance.

Balance Sheet: The limits of expertise

Tell us what you think. (0) comments.
Send to a friend:   

Nicolet decides to privatize

Green Bay-based Nicolet Bankshares Inc. said it plans to go private to save as much as $400,000 a year in government compliance costs, according to securities documents filed Friday.

Nicolet is at least the third bank holding company in Wisconsin this year to make such a move in order to avoid paying the additional costs of complying with Sarbanes-Oxley Act requirements. The law, passed after accounting fraud led to the collapse of Enron Corp. and other companies, hits small companies particularly hard, according to its critics.

Many other small companies probably are looking at going private, said one corporate securities lawyer.

“If they’re not looking at that possibility, I’d be surprised,” said Steven R. Barth at Milwaukee-based Foley & Lardner LLP.

Nicolet and the other banking companies that are going private - First Banking Center Inc. in Burlington and Blackhawk Bancorp Inc. in Beloit - are trying to reduce their shareholder roles below 300 so they do not have to be registered with the Securities and Exchange Commission.

Nicolet decides to privatize

Tell us what you think. (0) comments.
Send to a friend:   

SEC looks again at Sarbanes-Oxley rules

US regulators are to consider how they can write specific rules for smaller public companies following a wave of complaints about the costs associated with the Sarbanes-Oxley legislation.

The Securities and Exchange Commission on Thursday announced the establishment of a taskforce that will make recommendations on how the SEC could write rules that differentiate between big and smaller listed companies.

The intensive drive to reduce red tape for smaller companies will focus on whether they should abide by distinct rules in four areas. These are corporate governance, financial reporting, internal controls and stock offerings.

The SEC has produced many rules to implement the 2002 Sarbanes-Oxley law on corporate governance and accounting, which was drawn up after the Enron and WorldCom scandals and makes no distinction between big and smaller companies.

The most expensive provision is section 404 of the legislation, and its stipulation that companies document and test their internal controls against fraud.

The SEC insisted it was not seeking to roll back Sarbanes-Oxley and other securities laws, but would look at whether the rules it devises pursuant to legislation can be tailored for smaller companies.

SEC looks again at Sarbanes-Oxley rules

Tell us what you think. (0) comments.
Send to a friend:   

SEC lauded for Sarbanes-Oxley review

The technology industry is lauding plans by the Securities and Exchange Commission to examine of the impact of the Sarbanes-Oxley law. The Federal Accounting Standards Board Thursday issued its long-expected rules requiring public companies that award stock options to employees to categorize the value of those options as an expense, a move that would affect the company's bottom line.

But on the heels of that decision the SEC announced that it would appoint an advisory committee to help the commission examine the impact of the Sarbanes-Oxley Act and other aspects of the federal securities laws on smaller public companies.

"Now the time is ripe to review how the Act, including areas like internal control reporting, and other aspects of the SEC's regulations affect smaller companies," SEC Chairman William Donaldson said.

SEC lauded for Sarbanes-Oxley review

Tell us what you think. (0) comments.
Send to a friend:   

Shortage of Accountants Leads to New Recruiting Strategies

Accounting firms are resorting to all forms of recruitment to keep up with the workload stemming from the Sarbanes-Oxley Act of 2002, which was passed to clean up corporate America in the wake of meltdowns at Enron, WorldCom and others.
Charles Swanson, director of Ernst & Young's oil and gas practice in the Americas, has witnessed first-hand how far some companies will go to recruit new accountants. He has heard of firms calling up retired accountants, or recruiting former auditors who have moved to other career fields, the Houston Chronicle reported.

Swanson saw the extreme when he saw people at a downtown lunch spot sporting T-shirts that said, "If you're an accountant, ask me about a job opportunity."

"We never figured out who was doing it, but we were tempted to lock all our employees inside that day," Swanson told the Chronicle.

Shortage of Accountants Leads to New Recruiting Strategies

Tell us what you think. (0) comments.
Send to a friend:   

Disaffected Greenbrier director assails company's audit conduct

Alan James, the former chairman and current director of The Greenbrier Cos. Inc. who is feuding with fellow board members, accused the railcar maker this week of violating federal corporate accountability laws.

James alleged in a Monday, Dec. 13, letter to the Lake Oswego-based company that its audit committee violated the Sarbanes-Oxley Act by using its longtime outside counsel and company secretary, Kenneth D. Stephens, to audit the company's European operations for possible accounting irregularities.

James wrote that under the 2002 law the company should have hired an independent outside lawyer to investigate the alleged improprieties.

James, who has requested two inquiries into the accounting of the company's European operations in the past two years, said the resulting audit committee report was given to company auditors with false and misleading statements, and material omissions.

Greenbrier, which disclosed James' allegations Thursday in a prepared statement, said the charges "are without merit." The company said it "stands firmly" behind its financial records and that the audit committee review found "no unusual or unacceptable practices."

The company called James a "dissident shareholder" whose views have "grown out of harmony" with the rest of the company's board.

Disaffected Greenbrier director assails company's audit conduct

Tell us what you think. (0) comments.
Send to a friend:   

Report: Snow wants balanced Sarbanes-Oxley enforcement

Treasury Secretary John Snow calls Sarbanes-Oxley Act 'essential' but wants to avoid criminalizing mistakes. Snow said "appropriate, measured balance" is needed when enforcing the Sarbanes-Oxley Act, the most significant revision of U.S. securities law since the 1930s, the Wall Street Journal reported Friday.

In an interview with the Journal, Snow said, "We don't want to criminalize mistakes. Getting the right balance there... is a very serious public policy issue, and failure to get the balance right has extraordinarily negative long-term economic consequences."

He added that Sarbanes-Oxley is "absolutely essential" and requires no "major modifications," according to the newspaper.

Report: Snow wants balanced Sarbanes-Oxley enforcement

Tell us what you think. (0) comments.
Send to a friend:   

SEC's Nicolaisen Welcomes PCAOB Involvement in Independence Standards-Setting

In response to the Public Company Accounting Oversight Board (PCAOB) action earlier this week, proposing certain ethics and independence rules for public comment, the Commission’s Chief Accountant, Donald T. Nicolaisen, noted that he welcomed PCAOB involvement in this important area.

The PCAOB’s proposed rules grew out of its public roundtable on auditor independence held in July, and address issues relating to tax services and contingent fees.

"It’s appropriate that the PCAOB play a robust role in the area of auditor independence," Nicolaisen stated. "Since the passage of the Sarbanes-Oxley Act in 2002, there have been many questions about the types of services auditors may provide without compromising their independence, especially with respect to tax services. PCAOB guidance in this area will be helpful to audit committees, in particular, as they consider these issues."

SEC's Nicolaisen Welcomes PCAOB Involvement in Independence Standards-Setting

Tell us what you think. (0) comments.
Send to a friend:   

Silicon Valley loses fight on stock options: Companies must deduct perk's value when figuring profit

In July, the House voted 312-111 to pre-empt the widely expected FASB rule by limiting the disclosure requirement to options given to a company's top five executives. That bill died when the Senate refused to take it up.

FASB supporters say that not only is the accounting board right on the merits, but this time, the bookkeeper group has the upper hand, said Pat McGurn, a consultant with Institutional Shareholder Services, a Maryland firm that advises pension fund managers.

When FASB tried to push through an options-expensing rule in 1994, it had to back down after the Senate passed a resolution that effectively threatened to strip the body of its source of income, McGurn said.

But the Sarbanes-Oxley reform bill that was passed in the wake of the recent corporate scandals gave FASB independent financial support. That has stiffened the accounting board's resolve, McGurn said.

While the House is supporting high-tech firms, FASB has the staunch backing of Sen. Richard Shelby, R-Ala., chairman of the Senate Banking Committee.

"Sen. Shelby has worked hard in the past to insure that Congress did not interfere with this process, and he is committed to insuring that this does not occur in the future,'' Shelby spokesman Andrew Gray said Thursday.

Silicon Valley loses fight on stock options: Companies must deduct perk's value when figuring profit

Tell us what you think. (0) comments.
Send to a friend:   

Auditors: The Leash Gets Shorter

For years, Sun Microsystems Inc. (SUNW ) looked to its auditor, Ernst & Young International, to provide all manner of advice on other financial matters. But recently the Santa Clara (Calif.) high-tech company has started to shop elsewhere. PricewaterhouseCoopers now handles Sun's internal audit, KPMG International helps test financial controls, and Deloitte Touche Tohmatsu prepares tax returns for Sun's expatriate employees. With new federal rules beefing up the audit process, "it's our firm belief that [Ernst & Young] should focus specifically on the audit," says Stephen T. McGowan, Sun's chief financial officer.

Sun is not alone. After auditors failed to catch financial fraud at Enron and WorldCom (now MCI), Congress ordered companies to quit hiring their auditors for a slew of services, from bookkeeping to computer-systems design. The 2002 Sarbanes-Oxley corporate-reform act left it up to boards' audit committees to decide whether the same accounting firm could provide other services -- including tax advice. But with audit committees eager to avoid any chance for conflicts, more companies, from General Electric to Home Depot to American Express, are switching their tax work, too.

Now they have another reason to play it safe. On Dec. 14, the Public Company Accounting Oversight Board proposed stricter curbs on audit firms selling tax services to their clients. The board, created by Sarbanes-Oxley, says it wants to ban auditors from promoting aggressive tax shelters to client companies and their top execs. It also wants to keep them from accepting contingent fees, payments based on a percentage of their clients' tax savings. Also off limits: offering tax services to top company officers. The rules, which must be approved by the Securities & Exchange Commission, "draw clear lines to distinguish inappropriate services that impair auditor independence from permissible services that are not detrimental," says PCAOB Chairman William J. McDonough.

Auditors: The Leash Gets Shorter

Tell us what you think. (0) comments.
Send to a friend:   

Cos. Outsourcing Finance Functions Experience More Control over Governance, Security than Expected

Concerns that the outsourcing of finance and accounting functions impedes the ability to control key processes related to compliance and governance appear to have abated, according to a survey commissioned by Accenture.

Among 203 executives surveyed by the Economist Intelligence Unit, nearly 60 percent now believe that the outsourcing of finance functions enhances the ability to adhere with compliance regulations such as Sarbanes-Oxley. And more than half believe that outsourcing alleviates the burden of staying on top of frequent changes to tax codes and accounting rules, while also providing an increased level of information transparency, visibility of controls and clarity of accountability.

Almost 60 percent of respondents agree that outsourcing increases the rigor of business processes, because they are better documented, according to Accenture.

"Executives increasingly believe that outsourcing can happily co-exist with today's greater emphasis on governance," said Stewart Clements, president of Accenture Finance Solutions. "We believe that this significant shift in attitude stems from results achieved by companies that have already outsourced their finance functions."

Cos. Outsourcing Finance Functions Experience More Control over Governance, Security than Expected

Tell us what you think. (0) comments.
Send to a friend:   

Security and Sarbanes Oxley

The essential first step in effective information security for Sarbanes-Oxley is that a risk assessment methodology be used to make informed security investment decisions. If a company has not conducted a risk assessment, it cannot know the extent of its security problem. Even when it knows the extent of security and cybersecurity needs, it cannot protect everything.

On the basis of the results of a risk assessment, infrastructure changes can be adopted to mitigate identified risks. These can be highly individualized since there are several categories of cybersecurity technologies available that could be used to better secure critical infrastructure systems. However, it is also important the company keep in mind the limitations of these technologies, as well as the interactions of the technologies with the security processes and the people using the technologies.

Security and Sarbanes Oxley

Tell us what you think. (0) comments.
Send to a friend:   

Fuzzy Math

The federal budget is a bizarre mess, with unique bookkeeping practices that make it almost impossible for an outsider—or even most insiders—to figure out what's really going on. If corporations produced numbers like these, jail cells would be filled with CEOs. But Washington doesn't impose laws like Sarbanes-Oxley reform legislation on itself. It does whatever it wants.

So I love the debate about proposals to "reform" federal budget accounting to ignore the impact of proposed Social Security personal accounts. As you know, the argument is that letting people set up personal accounts is actually a federal investment, not an expense, because the accounts let government save money in the long run by reducing future Social Security expenditures.

Fuzzy Math

Tell us what you think. (0) comments.
Send to a friend:   

Thursday, December 16, 2004

Snow wants measured Sarbanes-Oxley enforcement-WSJ

Treasury Secretary John Snow said "appropriate, measured balance" is needed when enforcing the Sarbanes-Oxley Act, the most significant revision of U.S. securities law since the 1930s, the Wall Street Journal reported on Friday.

In an interview with the Journal, Snow said, "We don't want to criminalize mistakes. Getting the right balance there... is a very serious public policy issue, and failure to get the balance right has extraordinarily negative long-term economic consequences."

He added that Sarbanes-Oxley is "absolutely essential" and requires no "major modifications," according to the newspaper.

"I think regulators, government officials, U.S. attorneys -- all of us who have a role in administering the oversight system for corporate governance -- have to be cognizant of the need for appropriate, measured balance here," Snow told the Journal.

Snow wants measured Sarbanes-Oxley enforcement-WSJ

Tell us what you think. (0) comments.
Send to a friend:   

Slate: The global economy thrives without the United States

Our financial markets have long been the envy of the world, despite their many flaws. But foreign companies now want out of them. The FT has run a series of stories hinting that European companies are really cheesed off by the requirements imposed upon them by Sarbanes-Oxley. Apparently, "the majority of German companies with U.S. stock market listings would like to get out of New York to avoid the cost and hassle of complying with the U.S. regulatory regime."

Young foreign wannabe executives are shunning the United States. Business Week earlier this year lamented the "staggering" declines in applications of foreigners to U.S. business schools—down 24 percent at Wharton in 2004. According to the Graduate Management Admission Council's four-year trend, the number of foreigners taking the GMAT has fallen 27 percent since 2002, and this detailed report (see Fig. 9 on Page 13) shows that 74 percent of the schools in the survey saw declines in international applications in 2004. Thanks in part to the sharp reductions in the availability of H1-B visas—from about 200,000 in fiscal 2001 to about 65,000 this year—legions of skilled foreigners now ply their trades at home, or in other countries, instead of helping to build businesses here.

Slate: The global economy thrives without the United States

Tell us what you think. (0) comments.
Send to a friend:   

NevOn: Delisting in the US because of Sarbanes-Oxley

The costs of compliance with the Sarbanes-Oxley Act are leading some international companies to delist in the US, with others not bothering to apply for stock market listing.

A report yesterday in Business Week Online said that the tough corporate-reporting regulations passed in the US in 2002 after the wave of financial scandals have many American companies scrambling to comply with the new requirements. But in Europe, they're provoking a slightly different reaction.

Financial-management consultancy Parson Consulting estimates that complying with Sarbanes-Oxley would cost the 70 British-headquartered businesses included in their survey a total of $860 million. Another survey of corporate board members conducted by executive-search firm Korn/Ferry International estimates that complying would cost the US companies surveyed an average of $5.1 million.

NevOn: Delisting in the US because of Sarbanes-Oxley

Tell us what you think. (0) comments.
Send to a friend:   

Silicon Valley Watcher: Great, all that work for nothing much---SOX compliance will do little to shield shareholders from losses says Booz Allen study

Analysis of the performance of 1,200 $1 billion market cap companies over a five-year period has found that Sarbanes-Oxley compliance systems will not shield companies from a seven-times higher risk of losses from normal competitive blunders.

Silicon Valley Watcher: Great, all that work for nothing much---SOX compliance will do little to shield shareholders from losses says Booz Allen study

Tell us what you think. (0) comments.
Send to a friend:   

SEC looks again at Sarbanes-Oxley rules

US regulators are to consider how they can write specific rules for smaller public companies following a wave of complaints about the costs associated with the Sarbanes-Oxley legislation.

The Securities and Exchange Commission on Thursday announced the establishment of a taskforce that will make recommendations on how the SEC could write rules that differentiate between big and smaller listed companies.

The intensive drive to reduce red tape for smaller companies will focus on whether they should abide by distinct rules in four areas. These are corporate governance, financial reporting, internal controls and stock offerings.

The SEC has produced many rules to implement the 2002 Sarbanes-Oxley law on corporate governance and accounting, which was drawn up after the Enron and WorldCom scandals and makes no distinction between big and smaller companies.

The most expensive provision is section 404 of the legislation, and its stipulation that companies document and test their internal controls against fraud.

SEC looks again at Sarbanes-Oxley rules

Tell us what you think. (0) comments.
Send to a friend:   

Sarbanes-Oxley a challenge for many smaller companies

Many large public companies have complied with a major provision of the Sarbanes-Oxley Act, while smaller ones are struggling and have sought deadline extensions, officials say.

Virtually all -- 99 percent -- of the large U.S. companies that responded to a survey released last month by Los Angeles executive search company Korn/Ferry International had already met a key deadline outlined in Section 404 of the act. For most of the 800 Fortune 1,000 companies that responded to the survey, that deadline was Nov. 15.

The average cost for these large companies to comply was $5.1 million, according to the survey. Ongoing compliance costs will average $3.7 million annually, the survey found.

Sarbanes-Oxley a challenge for many smaller companies

Tell us what you think. (0) comments.
Send to a friend:   

London Poised to Take on Big Apple IPOs (Free registration required)

The initial public offering of China's flagship airline, Air China, this week on the London Stock Exchange could be a harbinger of emerging companies going to the City rather than Wall Street to raise capital.

While Air China was only the fifth Chinese company to list shares in London, and one of 10 emerging markets IPOs in 2004, bankers and consultants say 2005 will be a banner year for IPOs in London, because the U.S. regulatory regime is too onerous for many eastern European and Asian companies.

"We expect several more emerging markets IPOs in London," said Tony Fry, a partner with consultancy KPMG.

For years London has vied, with limited success, with New York for foreign companies that crave the veneer of corporate respectability that a listing on a major exchange can offer.

But the combination of new corporate governance rules as defined by the Sarbanes-Oxley Act and what is perceived as the insular nature of the U.S. markets has pushed some foreign companies to turn to London.

London Poised to Take on Big Apple IPOs (Free registration required)

Tell us what you think. (0) comments.
Send to a friend:   

SEC to study small companies' Sarbanes-Oxley costs

A panel to examine whether small public companies are being forced to bear exorbitant costs to meet corporate reforms enacted in 2002 was announced by the U.S. Securities and Exchange Commission on Thursday.

Companies have complained that the Sarbanes-Oxley Act imposes excessive requirements for corporate disclosure, maintaining internal controls over financial reporting, and access to capital markets, areas on which the new panel may recommend rule changes.

The panel will be co-chaired by attorney Herbert Wander of Katten Muchin Zavis Rosenman, and James Thyen, president and chief executive officer of Kimball International Inc. (KBALB.O) , an Indiana-based furniture and electronics maker.

SEC to study small companies' Sarbanes-Oxley costs

Tell us what you think. (0) comments.
Send to a friend:   

Line56.com: The Strategy of Controls

Yesterday, a survey showed that Sarbanes-Oxley (SOX) laws are both beneficial and expensive. Today it's time to understand how companies, particularly larger enterprises, can use the systems and processes set up for SOX compliance to generate strategic value and make the benefits outweigh the expenses.

The past several months of SOX activity have been a fire drill. As in the case of other mandates, the first stage has been for impacted companies to comply with the letter of the law, and in the case of SOX this has meant setting up a secure, documented, and accountability-laced control and monitoring regime around financials and related data.

Think of it this way: every controls issue can impact any other area of the business. It isn't just about preventing fraud. If employees bypass existing controls in order to approve their own purchases, the enterprise might have a maverick spending problem. If an employee adds an identifying suffix to a purchase order transaction, the enterprise might develop a duplicate records problem.

Line56.com: The Strategy of Controls

Tell us what you think. (0) comments.
Send to a friend:   

Sarbox and BPO Present Problems

Enterprises should take a conservative approach when determining whether or not an outsourced process complies with all Sarbox stipulations, recommends Meta Group's Stan Lepeak. Executives should be clear about what represents a best-faith effort to accomplish compliance.

The Sarbanes-Oxley Act presents new and stringent requirements for how enterprises document particular business processes -- especially those related to financial reporting. At the same time, a new trend is underway to send whole business processes out to third parties to execute, while the enterprise spends its time and energy on core competencies.

How do the two issues mix? Not very well, according to research by the Meta Group . In fact, the uncertainty surrounding how BPO (business process outsourcing) and Sarbox relate will hinder BPO adoption for some time, predicts Meta's Stan Lepeak.

Sarbox and BPO Present Problems

Tell us what you think. (0) comments.
Send to a friend:   

Sarbanes-Oxley: Killing Enterprise to Save It

In reaction to corporate scandals, greed, failure, and fraud, Congress in July 2002 passed the Sarbanes-Oxley Corporate Reform Act, named after Sen. Paul Sarbanes (Democrat, Maryland), at the time chairman of the Banking, Housing and Urban Affairs Committee) and Rep. Michael Oxley (Republican, Ohio) to more strictly regulate corporate accounting. But this law has created awful costs that far exceed the benefits, and which have hampered the economic recovery and have contributed to slow employment growth.

Only a few corporations committed deceptive accounting and engaged in and aided a massive looting of shareholder assets. Sarbanes-Oxley is an over-reaction that illustrates the basic problem of regulation: all are required to incur great costs to fix the problems caused by a few. The law requires 12,000 firms to file complex financial statements with the Securities and Exchange Commission. It's like the smog tests required of car owners in most states, where millions of car owners have to incur an expense even though only a small proportion of the cars cause most of the pollution.

The total compliance cost in terms of money spent is over $5.5 billion per year. Much of the cost is passed on to consumers, which then reduces sales, and some is borne by the investors, stifling the expansion of the company. That does not take into account the much greater cost to the economy of enterprises not expanding or starting, because "Sarbox" makes it too costly.

Foldvary: Sarbanes-Oxley: Killing Enterprise to Save It

Send to a friend:   

TEOCO receives coveted SAS 70 Type II Certification – meets highest level security requirements (PDF)

TEOCO (The Employee Owned Company) announced today that its BillTrak Pro Application Service Platform (ASP) and Outsource Services have successfully completed a Statement on Auditing Standards No. 70 Type II “Audit” performed by a nationally recognized accounting firm.

Independent auditors KPMG conducted the certification which has become more and more important with the recent passage of Sarbanes – Oxley legislation. TEOCO was able to meet the requirements of the SAS 70 Type II audit, which places the highest level of scrutiny on the company’s processes, procedures and general controls.

"We are extremely proud to have completed this rigorous and thorough certification process," says Atul Jain, Chairman and CEO of TEOCO Corporation. "With the completion of this audit, our customers can be assured that our products and services are not only safe and reliable but enable them to meet the requirements imposed by Sarbanes – Oxley legislation."

TEOCO receives coveted SAS 70 Type II Certification – meets highest level security requirements (PDF)

Tell us what you think. (0) comments.
Send to a friend:   

It's Time to Take Your SOX Off

To protect shareholder value, companies must link risk management with strategic planning and avoid overreacting to regulatory compliance mandates.

Here’s a fact that bucks conventional wisdom: More shareholder value has been wiped out in the past five years as a result of mismanagement and bad execution of strategy than was lost because of all of the recent compliance scandals combined. This is a key finding of a recent Booz Allen Hamilton survey and analysis of the performance of 1,200 firms with market capitalizations of more than $1 billion for the five-year period from 1999 through 2003.

Consider the 360 worst financial laggards. Eighty-seven percent of the value lost by these firms was attributable to strategic missteps — management ineffectiveness in reacting to competitive pressures or forecasting customer demand — and operational blunders, such as cost overruns and M&A integration problems. Only 13 percent of the value destruction suffered by these companies was caused by regulatory compliance failures or was a result of poor oversight of company operations by corporate boards.

It's Time to Take Your SOX Off

Tell us what you think. (0) comments.
Send to a friend:   

Will Merger Mania Extend to 2005?

PwC's Bob Filek noted that as M&A financing sources chase yields and try to beat their benchmarks, they've been willing to go into lower-quality issues and take on longer maturities. "Executives will also be shifting their focus from Sarbanes-Oxley compliance matters to growth and acquisitions," he added.

The deal drivers in 2005 figure to be cost and growth, added PwC. Greg Peterson, a transaction-services partner focused on the private equity sector, says buyers are asking, "How can we improve the cost structure, and once we do that, what's the upside growth potential?" The upshot: Deals that don't offer growth potential won't get done, despite cost savings. That's true for both the corporate side as well as the private equity side.

Will Merger Mania Extend to 2005?

Tell us what you think. (0) comments.
Send to a friend:   

Wednesday, December 15, 2004

Companies 'going dark' lose value

Companies that sought to escape the compliance costs associated with the Sarbanes-Oxley law saw their stock prices fall by more than 10 per cent in the immediate aftermath, says an academic study.

The research by Pennsylvania and Maryland universities highlights how investors react badly to public companies that disclose plans to free themselves of financial reporting obligations made more onerous by Sarbanes-Oxley.

It concludes that the 2002 law, supposed to give investors more reliable financial information, may be having the "perverse effect" of damaging transparency.

The study says the law may be prompting managers of troubled companies to seek to end their reporting obligations.

It also raises questions for European and Asian companies with US share listings that are pressing the SEC for an easing of their reporting obligations because of the Sarbanes-Oxley law.

Companies 'going dark' lose value

Tell us what you think. (0) comments.
Send to a friend:   

Business Groups Begin Quiet Campaign to Oust SEC's Donaldson

The Business Roundtable, the U.S. Chamber of Commerce, the National Association of Wholesaler-Distributors played a critical role in reelecting President Bush. Now the groups are part of a quiet effort to convince the President that it's time for a new Securities and Exchange Commission chair, the Wall Street Journal reported.

Believing the post-Enron reforms have led to a strangled business environment, in part because of the greater authority given to the SEC by the Sarbanes-Oxley corporate reform legislation. The Journal reported that the groups believe the reform effort has gone to far and threatens to hamper the economy by discouraging corporate risk taking.

They seek an SEC chair who understands the challenges faced by executives and their boards. They claim the current chairman, William Donaldson, does not understand their concerns.

Since Donaldson is a close friend of the Bush family and was appointed chairman two years ago by President Bush, efforts to oust him are expected to be quiet, the Journal reported, predicting his possible departure early next year.

Business Groups Begin Quiet Campaign to Oust SEC's Donaldson

Tell us what you think. (0) comments.
Send to a friend:   

CFOs Upbeat on Economy; Expect Jump in Capital, Tech Spending

When asked about permanent changes resulting from Sarbanes-Oxley Section 404 relating to the testing and reporting of internal audit controls, 30 percent of CFOs cited better control over documentation of systems changes, while 21 percent said that they had invested in a technology solution to monitor compliance and maintain and store internal control documentation. More than half (57 percent) said that they had made "no substantive changes," according to FEI and Baruch.

Interestingly, a significant number of CFOs are expecting a greater increase than the markets are. About one in three CFOs said that the futures markets -- which have been assuming that the Libor rate will rise to 3.36 percent in the next 12 months -- are underestimating the rise, while just over half of the respondents thought this rise is "just about right." Burton Rothberg, assistant accounting professor at Baruch, noted that in the last two quarters, the CFOs surveyed have correctly predicted that futures markets were overestimating future increases in interest rates.

CFOs Upbeat on Economy; Expect Jump in Capital, Tech Spending

Tell us what you think. (0) comments.
Send to a friend:   

Sarbanes-Oxley is not a merlot

If you're a business owner, you already know that. You are most certainly aware that the Sarbanes-Oxley Act of 2002 is a piece of post-Enron legislation that rewrote the rules of corporate responsibility, accountability and oversight. Among other things, this act has some real implications for retirement plans when changing providers. Sarbanes-Oxley requires plan sponsors to give participants and beneficiaries 30 days advance notice of a blackout period or face financial penalties.

These blackout periods are typical when a plan transitions from one provider to another. During the period when assets are actually transferred between providers, old records are reconciled, and new records are established.

Sarbanes-Oxley is not a merlot

Tell us what you think. (0) comments.
Send to a friend:   

Board Proposes Rules Concerning Independence, Tax Services, and Contingent Fees

The Public Company Accounting Oversight Board voted unanimously at its open meeting to propose for public comment certain ethics and independence rules concerning independence, tax services, and contingent fees.

The Board’s proposed rules fall into three areas. First, the proposed rules would identify three circumstances in which the provision of tax services impairs an auditor's independence:

Proposed Rule 3521 would treat registered public accounting firms as not independent of their audit clients if they enter into contingent fee arrangements with those clients.

Proposed Rule 3522(a) and (b) would treat a registered public accounting firm as not independent from an audit client if the firm provides services related to planning or opining on the tax consequences of a transaction that is a listed or confidential transaction under Treasury regulations. In addition, proposed Rule 3522(c) includes a provision that would treat a registered public accounting firm as not independent if the firm provides services related to planning or opining on a transaction that is based on an aggressive interpretation of applicable tax laws and regulations.

Proposed Rule 3523 would set a new requirement to treat a registered public accounting firm as not independent if the firm provided tax services to officers in a financial reporting oversight role of an audit client.

Board Proposes Rules Concerning Independence, Tax Services, and Contingent Fees

Tell us what you think. (0) comments.
Send to a friend:   

TRW Automotive CIO Joseph Drouin: Standardizing Processes To Deliver Value

As CIO for TRW Automotive, Joseph Drouin is responsible for the complete range of I.T. for TRW Automotive locations worldwide. With 2003 sales of US$11.3 billion, TRW Automotive ranks among the world's top 10 automotive suppliers.

Drouin: We just went public in February, so the effort to become Sarbanes-Oxley compliant is a top concern.

Several years ago there was no TRW Automotive -- we were a group of business units that acted independently under a larger corporation. As a result, there is still a lot of diversity and complexity in our I.T. architecture, so trying to standardize and consolidate is a huge effort.

In addition, the automotive industry is very challenging today, so managing cost and demonstrating value are on the top of the list of concerns.

TRW Automotive CIO Joseph Drouin: Standardizing Processes To Deliver Value

Tell us what you think. (0) comments.
Send to a friend:   

Court of Appeals Ruling on Section 804 of the Sarbanes Oxley Act, Reviving Previously Expired Security Claims (PDF)

The central issue raised in these appeals is whether Section 804 of the Public Company Accounting Reform and Investor Protection Act of 2002 (“Sarbanes-Oxley”),1 revives previously expired securities claims. Although these cases involved different parties, were decided by different district courts, and have not been formally consolidated on appeal, we heard them on the same day and now resolve them together because they present substantially identical issues.

For the reasons set forth below, we affirm the respective judgments of the district courts, in each case finding that Section 804 of Sarbanes-Oxley—which extended the statute of limitations for private securities fraud cases from the longer of one year from the date of occurrence or three years from the date of discovery to the longer of two years from the date of occurrence or five years from the date of discovery—does not revive plaintiffs’ expired securities fraud claims. In the case of McBride v. Ernst & Young LLP, we further affirm Judge Platt’s finding that plaintiffs therein did not commence their action against defendant Ernst & Young within the applicable statute of limitations, and therefore hold that Judge Platt properly dismissed the complaint against Ernst & Young.

Court of Appeals Ruling on Section 804 of the Sarbanes Oxley Act, Reviving Previously Expired Security Claims (PDF)

Tell us what you think. (0) comments.
Send to a friend:   

www.gavinnicholson.com: Impact of SOX

As reported on WebCPA Sarbanes-Oxley is beginning to bite in the US. It'll be interesting to see if this translates into any lessening of earnings restatements or, better yet, unforeseen collapses or scandals. Meanwhile, international firms are having a harder time complying with two sets of regulations and considering whether the costs of compliance with SOX outweigh the benefits.

www.gavinnicholson.com: Impact of SOX

Tell us what you think. (0) comments.
Send to a friend:   

The CIO and Decision-Making

The year 2004 has marked a unique period for management in the United States. Since the recession of 2001, the economy has faced many difficult challenges; however no industry has had such a significant period of change than the Information Technology (IT) Industry. Over the last 10 years the IT Industry has evolved, skyrocketed and plummeted with a seemingly effortless attrition. In the early to mid Nineties many companies freely distributed boundless fiscal budgets to support the hopeful advantages of cutting edge technology. Regrettably, the IT environment of 2004 is quite different. Instead of the unbounded financial resources, staff and cutting edge technology of the “Dot-Com-Boom”, we find that more and more IT budgets end up on the chopping block and the once fearless leaders of management are reduced to “Beggars of the Boardroom”.

The CIO and Decision-Making

Tell us what you think. (0) comments.
Send to a friend:   

Time Warner agrees to $510 million penalty in AOL probes

Time Warner said it agreed to pay $210 million to settle a Justice Department investigation and an additional $300 million to wrap up the SEC matter. The SEC settlement would have to be approved by SEC commissioners.

In the Justice Dept. arrangement, Time Warner must pay a fine of $60 million and create a $150 million fund, which it can use to settle any related shareholder or securities lawsuits. Time Warner agreed to establish an independent monitor, who will review the effectiveness of AOL's internal controls, including those related to the accounting for advertising and related deals.

In addition, Time Warner said that under a settlement agreement with the Securities and Exchange Commission, it won't admit or deny any wrongdoing. Time Warner said it will "pay a $300 million penalty, which the SEC staff will request be used for a Fair Fund, as authorized under the Sarbanes-Oxley Act."

On Wednesday afternoon, James Comey, deputy attorney general of the Justice Department, said that Time Warner and AOL "accepted responsibility" for their employees' acts and agreed to "foster the critical corporate culture with respect to the law that we want to see at every company."

Time Warner agrees to $510 million penalty in AOL probes

Tell us what you think. (0) comments.
Send to a friend:   

John Dvorak's Second Opinion: What Oracle may really be after with PeopleSoft

PeopleSoft Sarbanes-Oxley software could be the prize.

During periods of slow growth smart companies think ahead of the curve, imagine worst case scenarios and employ defensive or blocking strategies when they can. Usually they don't cost $10 billion. You can block cheaper than that. Is it possible that there is something hidden at PeopleSoft nobody is talking about? ...

John Dvorak's Second Opinion: What Oracle may really be after with PeopleSoft

Tell us what you think. (0) comments.
Send to a friend:   

Line56.com: The Cost and Benefits of SOX

A new survey conducted by Oversight Systems, which offers third party monitoring of financial systems, indicates that compliance with Sarbanes-Oxley (SOX) regulations is burdensome but ultimately beneficial.

The survey, which canvassed 222 executives in the financial realm (specifically, CFOs, VPs, directors, controllers, and treasurers), found 63 percent of respondents saying that SOX was either difficult or more difficult to implement than they had at first expected. Fifty-four percent of respondents said they had spent more on SOX in the first year of compliance than they had expected. Those who have invested in SOX have largely achieved or improved compliance, with 79 percent of respondents saying their controls are stronger than before the advent of SOX.

Line56.com: The Cost and Benefits of SOX

Tell us what you think. (0) comments.
Send to a friend:   

Microsoft's alpha tester

If anyone has a right to complain about buggy Microsoft products, it's Ron Markezich, the software maker's chief information officer. In addition to managing the company's tech gear, Markezich and his department function as a test bed for new Microsoft products. So since taking over as CIO last spring, Markezich has had a busy time of it.

Says Markezich, "The other thing on the security side is governance: Sarbanes-Oxley and regulatory compliance. I think a lot more time right now is being spent on compliance and the regulation. It probably is competing with the amount of time spent on traditional security."

Microsoft's alpha tester

Tell us what you think. (0) comments.
Send to a friend:   

Nation's Chief Security Officers Call for Help (PDF)

When asked to name the number one factor driving security investments in their organization, almost half of CSOs (45%) answered regulation and compliance from government, industry or internal mandates. The second and third highest scoring factors include self-directed decisions based on needs assessments (17%) and requirements from board of directors, corporate management, business units or customers (10%).

Of note, the risks or risk-related activities that CSOs estimate spending the most time and resources on in 2005 are information security (e.g., cybercrime) at 36%, business ethics compliance (e.g., Sarbanes/Oxley) at 21%, physical security (e.g., access control, cameras/surveillance, security officers, etc.) at 12%, security program management (e.g., RFID, workplace violence, etc.) at 8%, terrorism at 5%, intellectual property loss at 5% and investigations at 4%.

Nation's Chief Security Officers Call for Help (PDF)

Tell us what you think. (0) comments.
Send to a friend:   

Sarbanes-Oxley, Corporate Risk and Liability - the Year in Review: A Softrax Executive Webcast

Join for an enlightening study of Sarbanes-Oxley in 2004, and how it has shaped strategies for minimizing corporate risk and liability. Featured speaker will be Brian Pastuszenski, Partner, Litigation Practice Group, Testa, Hurwitz & Thibeault, LLP, and chair of its Securities Litigation Group and co-chair of the Corporate Finance and Securities Group. To be held December 20, 2004, at 1:00 PM EST (-5 GMT).

Sarbanes-Oxley, Corporate Risk and Liability - the Year in Review: A Softrax Executive Webcast

Tell us what you think. (0) comments.
Send to a friend:   

Foreign Outfits Rue Sarbanes-Oxley

The tough corporate-reporting regulations passed by Congress in 2002 after the wave of post-boom financial scandals have many American companies scrambling to comply with the new requirements. But in Europe, they're provoking a slightly different reaction.

As of the end of 2003, 305 European outfits with equity or debt traded in the U.S. were required to report to the Securities & Exchange Commission. Yet a few with dual listings on European and U.S. stock exchanges are reevaluating whether it makes sense to be listed in the U.S. at all. Some companies that are undergoing cost-cutting programs, such as British online-travel group Lastminute and German software company Lion Bioscience (LEON ), already have initiated the process to withdraw from U.S. stock exchanges.

While the deadline for European companies to file more detailed reports is months away, complaints about the Sarbanes-Oxley regulations are increasing. Last week a delegation of European executives from companies like Cadbury Schweppes (CSG ), Siemens (SI ), and BASF (BF ), met with in Washington with SEC Chairman William Donaldson to lobby for rule changes that would ease the burden. According to the Confederation of British Industry (CBI), the trade group that organized the Anglo-German delegation, the main complaint was the increased cost of complying with Sarbanes-Oxley Act's new regulations.

Foreign Outfits Rue Sarbanes-Oxley

Tell us what you think. (0) comments.
Send to a friend:   

Accounting crackdown costly to companies, poll says

The costs of complying with new accounting laws enacted in the wake of the Enron scandal are higher than companies have anticipated. But the process, executives say, should restore investor confidence in the market.

The conclusions come from auditing firm KPMG LLP through its annual survey of corporate executives in six regions of the country.

KPMG hired Penn, Schoen & Berland Associates Inc. to interview 98 local senior executives at public and private firms, 40 percent of whom represent the auto industry, between Nov. 17 and Dec. 7. The survey also found that local executives are not as optimistic about the overall economy compared with executives in other regions.

Accounting crackdown costly to companies, poll says

Tell us what you think. (0) comments.
Send to a friend:   

Tuesday, December 14, 2004

Cyber Security Industry Alliance Kicks Off Sarbanes-Oxley Compliance Initiative

Cyber Security Industry Alliance (CSIA), the only CEO public policy and advocacy group exclusively focused on cyber security policy issues, today kicked off an initiative on Sarbanes-Oxley compliance with the release of a report outlining the implications of Section 404 on information security. The question is no longer "whether" Section 404 covers information security the report concludes, but rather "how" to comply with this critical section in the context of IT security.

"Companies are now realizing the sheer magnitude of implementing Sarbanes-Oxley Section 404 controls, and many have only touched the tip of the iceberg," said BindView CEO Eric J. Pulaski. "Compliance and successful audits for Sarbanes-Oxley place an extraordinary burden across the enterprise, and particularly on IT organizations that must respond to the demanding and watchful eyes of their CEOs, CFOs and boards of directors. With millions of dollars, company reputation and your personal liability at stake, it's a safe bet that few compromises will be made in locking down internal controls. While many companies will meet the initial deadlines by throwing people and money at the problem, the greatest long-term challenge will be how to sustain compliance in an affordable manner."

Cyber Security Industry Alliance Kicks Off Sarbanes-Oxley Compliance Initiative

Tell us what you think. (0) comments.
Send to a friend:   

Tools: SentryAccess Secure SSO Access Management

SentryAccess includes all components necessary to monitor and report user access to the corporate system. With its strong authentication methods, all accesses are authorized and monitored after identifying the user. Real-time monitoring feature allows to survey current users and accesses, and its log reporting feature displays comprehensive view of all accesses to the protected resource.

SentryAccess manages user authentication and authorization; thereby reducing the number of passwords users must remember in order to access applications and resources needed to be productive. Fewer passwords to recall and maintain translate to a lower volume of IT help desk traffic, as between one-third and half of all calls are related to forgotten or incorrect passwords. Further, with SentryAccess’s granular delegated administration capabilities, administration authority may be shared among as many sub-administrators as deemed appropriate, ensuring that your system is managed around the clock.

Thirty-day trial available for download.

Tools: SentryAccess Secure SSO Access Management

Tell us what you think. (0) comments.
Send to a friend:   

2004 Oversight Systems Financial Executive Report On Sarbanes-Oxley Compliance (PDF)

Individual accountability, fraud safeguards, error reduction and board empowerment all seen as benefits of Sarbanes-Oxley; however overwhelming majority of executives say Congress should revisit the legislation but support sections 302, 404 and 409 of the law

Oversight Systems Inc. today announced the results of the 2004 Oversight Systems Financial Executive Report On Sarbanes-Oxley Compliance, a nationwide survey of 222 financial executives. The report shows most financial executives are torn on the cost vs. benefits of Sarbanes-Oxley compliance.

The findings reveal that a majority of financial executives (57 percent) say Sarbanes-Oxley (SOX) compliance was a good investment for stockholders. However, when asked about the impact of SOX compliance on shareholder value the view was mixed. Although a clear majority (81 percent) think Congress needs to revisit SOX legislation, most would still include the sections that require the CEO and CFO to sign off on financial reports (Section 302); increased documentation and monitoring of internal controls (Section 404); and the timely disclosure of material changes (Section 409).

2004 Oversight Systems Financial Executive Report On Sarbanes-Oxley Compliance (PDF)

Tell us what you think. (0) comments.
Send to a friend:   

Detroit-Area Executives Expect Stronger Business Growth, KPMG Survey Finds

KPMG also asked senior executives at public companies in the Detroit area a number of questions related to the impact of new financial reporting regulations. In general, 86 percent viewed complying with the Sarbanes-Oxley Act as a priority business issue, with 46 percent of those viewing it as the "highest priority."

Survey respondents did indicate a general concern about the effects of the broad sweep of new regulations on their companies. Some 46 percent said recent legislative changes have had a negative impact on their company to date. In the same vein, 62 percent indicated that costs related to complying with the internal-controls requirements of Section 404 of the Act have outweighed the benefits seen to date.

"The efforts to comply with the new regulations have been intense," Dobbs said. "That's because they were underestimated. It was very difficult to quantify the upfront effort."

Detroit-Area Executives Expect Stronger Business Growth, KPMG Survey Finds

Tell us what you think. (0) comments.
Send to a friend:   

Top execs seem a little out of touch on business ethics

A conversation about business ethics is like talking about the weather: Everyone has an opinion, but they seem to be powerless to change it. Corporate accounting and financial scandals of recent years have demonstrated the lack of ethical behavior in numerous companies, but even well-intentioned oversight such as the Sarbanes-Oxley Act seems a bit off the mark when it comes to day-to-day behavior.

Now, the Center for Ethical Business Cultures at the University of St. Thomas in Minneapolis is hoping to change that. It has developed an integrity study to help senior executives assess the ethical environment within their organizations.

Top execs seem a little out of touch on business ethics

Tell us what you think. (0) comments.
Send to a friend:   

Monday, December 13, 2004

Forbes.com: Company Delistings Nearly Triple in 2003

"We basically find that going dark can serve as a way to conserve cash but it may also be exploited by insiders trying to avoid the scrutiny of the market," Wharton accounting professor Christian Leuz said in the newsletter. "Whether insiders succeed, and whether the decision to go dark is a good or bad one, therefore depends on the governance in place."

To discourage companies from delisting, Leuz suggested Sarbanes-Oxley should be modified to reduce the costs of compliance for smaller firms. These firms, however, would have to disclose they're playing by different rules than larger companies.

Some investors have petitioned the SEC to close a loophole that allows companies to claim fewer than the minimum number of shareholders of record, when the actual number of shareholders exceeds the minimum. The investors have argued that companies are exploiting this loophole in order to go dark.

Forbes.com: Company Delistings Nearly Triple in 2003

Tell us what you think. (0) comments.
Send to a friend:   

Change in Workload Creates Auditing Tension

The new Sarbanes-Oxley accounting law has shifted the power in the auditor/client relationship back to the auditor, said Marcela Donadio, a partner with Ernst & Young.

"It's emboldened us, but there's also been a tendency to be spooked by anything we find, to be more Draconian," Donadio said. "There's a feeling like someone's coming behind you constantly judging your every decision. But we need to find a balance. And I think we are."

As auditors struggle with the new dynamic, they are working with a new set of counterparts at firms going through similar challenges. Under the new laws, the audit committee of the board ends up being a primary contact for the auditor, instead of the management team.

Change in Workload Creates Auditing Tension

Tell us what you think. (0) comments.
Send to a friend:   

IT Cost-Cutting Shifts to Software

Preparations to meet the regulatory requirements of the Sarbanes-Oxley Act are also having a ripple effect on software license consolidations. As some software publishers request that customers validate compliance with licensing agreements, some audits are leading companies to discover active licenses for unused software. Companies are also finding out-of-date per-user licenses as workforces are cut or reworked.

"Enterprise customers are turning around and looking at this information to see where they can further reduce their licensing costs," said Jenny Schuchert, vice president of program development at International Association of IT Asset Managers Inc., a Hartville, Ohio-based user association with over 500 members.

"There's certainly been a bigger uptick in software license consolidation over the past six months," she said.

Rising software maintenance fees are also leading enterprise customers to more closely examine the number of licenses they have in place.

IT Cost-Cutting Shifts to Software

Tell us what you think. (0) comments.
Send to a friend:   

Delistings from stock markets surge after Sarbanes-Oxley, study finds

The number of U.S. companies that delisted their common shares from exchanges nearly tripled in 2003, according to a new study that suggests some companies did so to avoid increased outside scrutiny.

Some 198 firms delisted their shares from exchanges, or "went dark," in 2003, up from 67 in 2002, according to the study co-written by professors from the Wharton School of the University of Pennsylvania and the University of Maryland's Robert H. Smith School of Business. The study was summarized in a recent Wharton newsletter.

The increased delistings followed the 2002 passage of the Sarbanes-Oxley corporate-reform legislation, a response to numerous company scandals in the United States.

Designed to improve corporate governance, Sarbanes-Oxley established a new supervisory board for the accounting industry and required companies to make more public disclosures to investors, among other measures.

The study found that most of the companies that delisted their shares say they did so to escape the steep costs associated with regulatory filings. Some smaller companies estimated the cost of complying with Sarbanes-Oxley was as high as $500,000 US.

Delistings from stock markets surge after Sarbanes-Oxley, study finds

Tell us what you think. (0) comments.
Send to a friend:   

Reform Overshoots (washingtonpost.com)

TWO YEARS AGO, in the wake of the Enron scandal and its successors, Congress passed the Sarbanes-Oxley Act, the biggest overhaul of corporate governance since the 1930s. Several parts of that reform have worked as envisioned. Chief executives and chief financial officers are more serious about their responsibility to provide shareholders with truthful financial statements. Conflicts of interest have declined at auditing firms, which used to certify the accuracy of management accounts while also depending on those same managers for consulting contracts. A new oversight board for auditors has been created, and company boards are more vigorous in ensuring that auditors report to them rather than to the chief financial officers whose accounts they are supposed to be checking. All these changes should help to rebuild investors' confidence in corporate statements, ensuring that capital flows to firms that will use it most efficiently. But one part of this overhaul is proving unjustifiably costly.

The costly aspect of Sarbanes-Oxley is Section 404, which concerns companies' diligence in stress-testing their financial systems. Companies depend on a fallible mix of staff and software to track costs and revenue, and these systems need to be checked periodically. Are the invoices sent out to customers correct? Is their cumulative value properly entered into the company's computers? Are overseas sales being converted at the appropriate exchange rate? Sometimes things can go spectacularly wrong. In one celebrated case, a firm's software program logged the revenue from every sale but failed to record any reduction in inventory. As a result, the company reported glorious profits on these sales, until a check of the warehouses at year's end revealed that the inventory reported in the accounts did not exist.

Reform Overshoots (washingtonpost.com)

Tell us what you think. (0) comments.
Send to a friend:   

Sarbanes-Oxley descends on feds

Federal officials need to better account for government money, according to Office of Management and Budget officials, who plan to release new financial management regulations before 2005.

Stricter financial control standards will be printed in OMB Circular A-123, a revised version of which is in the final stages of internal clearance, said Linda Springer, OMB controller. The circular governs implementation of the Federal Managers' Financial Integrity Act, which requires agency chiefs to issue annual assurances that internal financial controls are functioning properly.

Compliance with the circular's requirements will be mandatory starting in fiscal 2006. They will govern "everything that generates entries into your financial statement," Springer said.

The need for stronger policies on federal financial reporting became apparent after a joint committee of officials from OMB, the CFO Council and the President's Council on Integrity and Efficiency evaluated private-sector reporting requirements created by the Sarbanes-Oxley Act of 2002. The circular revisions were discussed in the context of Sarbanes-Oxley, which applies to corporate officers, "and if it's good for them, shouldn't we parallel on the federal side?" Lewis asked.

Sarbanes-Oxley descends on feds

Tell us what you think. (0) comments.
Send to a friend:   

Uncle Sam's Guiding Hand

The Transportation Security Administration, the Food and Drug Administration, and the Justice, Defense, and other departments have launched industry-specific initiatives that weigh heavily on the technology agendas of airlines, drug companies, financial-services providers, health-care providers, and defense contractors. Public companies across the board are struggling to meet the deadline to comply with section 404 of the Sarbanes-Oxley Act, which requires those companies to verify that their financial-reporting systems have appropriate controls, such as ensuring that revenue is recognized correctly.

"Anytime legal or regulatory mandates are handed down, we treat them with high priority in terms of IT strategy and spending," says Hari Makkala, senior VP and chief technology officer of People's Bank, a financial institution with 150 branches. In fact, over the past two years, regulatory-compliance projects such as Sarbanes-Oxley have been the primary focus of People's Bank's IT strategy.

Arguing whether Uncle Sam's guiding hand can lead to faster technology innovation is a great way to stir up debate. "Government mandates and [government's] interest in technology can be a way to initiate innovation through projects that ultimately will help companies on the business side," says Nick Evans, an analyst with BearingPoint's emerging technology practice. But there's greater risk of government setting technology mandates tending to retard innovation. "Innovation generally comes into being to address some social need, [it] emerges from smart people seeing new ways of doing things," says Ken Horner, Deloitte Consulting's U.S. IT-strategy practice leader. "In some ways, regulations can channel this. In other ways, regulations are a way to correct some loophole in the system, as with Sarbanes-Oxley."

Uncle Sam's Guiding Hand

Tell us what you think. (0) comments.
Send to a friend:   

Rock-Tenn Chooses Movaris

Movaris®, a leading provider of financial control management (FCM) software, today announced that Rock-Tenn [NYSE: RKT], one of North America’s leading manufacturers of packaging products, merchandising displays and recycled paperboard, selected Movaris Certainty to assist in the implementation of its Sarbanes-Oxley Act compliance. Rock-Tenn chose Movaris Certainty for its ease and speed of implementation, needing only minimal initial involvement from Movaris’ Professional Services team to assist with the accounting details, rather than making huge demands on IT resources. Further, Rock-Tenn found that Certainty’s internal document management and tracking of financial control activities make the document requirements of Sarbanes-Oxley much easier to manage. In addition to Sarbanes-Oxley, Rock-Tenn envisions using Certainty to improve a number of accounting and control process initiatives.

Rock-Tenn intends to use all four Movaris Certainty applications, including modules for both Section 302 and Section 404 Sarbanes-Oxley Act compliance, ongoing improvement in financial controls, and to automate different internal financial processes. Rock-Tenn plans to deploy Certainty’s automatic scheduling and delivery of email reminders to complete thousands of financial controls. The automatic email reminders, together with the familiar Adobe® PDF format for control activities, ensure that managers complete control tasks in a timely manner.

“Certainty's unique use of active Adobe PDF files allows users to engage in our process without having to understand the software and how it works. This huge benefit in training alone also opens the door for widespread rollout for a number of process initiatives,” said Larry Shutzberg, CIO of Rock-Tenn. “Further, the Movaris single enterprise-license pricing model encourages expanded use of the software, allowing us to include both power users assigned multiple tasks, as well as users assigned just one or two tasks, without additional cost-justification and licensing increases.”

Rock-Tenn Chooses Movaris

Tell us what you think. (0) comments.
Send to a friend:   

Sunday, December 12, 2004

MSNBC: The Street's Dark Side

The hammer came down quickly on Wall Street after the stock-market bubble burst. Regulators and lawmakers, under pressure to avenge the losses of millions of average Americans duped by unscrupulous brokers and corporate book-cookers, imposed swift reforms. Eliot Spitzer, the crusading New York state attorney general, demanded big brokerage firms overhaul their fraudulent stock research (they had been hyping companies that paid them huge investment banking fees). Congress passed the Sarbanes-Oxley Act to tighten up accounting and other standards for corporate behavior. With the reforms in place, Wall Street was again "an environment where honest business and honest risk-taking will be encouraged and rewarded," William Donaldson, chairman of the Securities and Exchange Commission, declared in a speech last year.

Despite the changes, however, Wall Street remains a treacherous place for the small investor. The big financial firms are still rife with conflicts that put their own interests, and those of big banking clients, ahead of everyone else's. (Just last week, for example, Citigroup was fined $275,000 for steering customers to invest in certain Citigroup funds that were "unsuitable'' for them.) Also, watchdog agencies like the SEC, even with bulked-up resources, continue to be ill-equipped to root out corporate crime. And when investors think they've been cheated, the system for ruling on their complaints remains stacked against them. "There are all sorts of practices and conflicts of interest on Wall Street that still have to be addressed, " says John Coffee, a Columbia University law professor.

MSNBC: The Street's Dark Side

Tell us what you think. (0) comments.
Send to a friend:   

Firms go great distances to fill accounting needs

Whether it's bringing in workers from overseas, grabbing every recent accounting school graduate or stealing workers from competitors, accounting firms say they're doing what they can to keep up with the sweeping changes.

"We just started a minimum 50-hour workweek when I first got there, and it wasn't even busy season yet," Tekatch said.

The driver behind much of the demand is Sarbanes-Oxley, the law created in 2002 in reaction to corporate failures like Enron and WorldCom.

Victor Burk, head of Deloitte & Touche's oil and gas practice, said it's a particular part of Sarbanes-Oxley, Section 404, that is using most of his clients' time and money.

Section 404 requires companies to establish internal controls, document them and warn shareholders of any weaknesses in those safeguards.

This means companies are reviewing everything from who is able to access accounting data, when sales people can record a sale and how inventory is tracked.

"Many companies don't have the excess staffing capacity to handle this work themselves, so they have brought in accounting and consulting firms, like us, for some of the compliance testing," Burk said.

A survey conducted by Financial Executives International found that businesses expect their internal accounting staff resources to be nearly tapped out, with plans to spend on average an additional $3.1 million and using 25,000 more employee hours to comply with Section 404.

Firms go great distances to fill accounting needs

Tell us what you think. (0) comments.
Send to a friend:   

Obscure rule affects Disney finances (free registration required)

In the world of corporate finance, Sarbanes-Oxley has been described as the accountants' relief act of 2002. But there is another, less well-known rule change adding to the work of accountants and chief financial officers in the wake of the Enron accounting scandal. It's called Fin 46, or Fin 46R in the revised version of the January 2003 rule.

Fin 46R is a rule developed by the Financial Accounting Standards Board, the industry body that tells U.S. corporations how they must record revenue, profit and the other details that go into quarterly and annual reports to the Securities and Exchange Commission.

The board, known as FASB, has instructed companies to take a harder look at what entities they fully disclose on their books. The new rule states that, even if a company is not the majority owner of a business or unit but absorbs a majority of losses or returns or has "the ability to make economic decisions" about the entity, it should consolidate it on its books.

Obscure rule affects Disney finances (free registration required)

Tell us what you think. (0) comments.
Send to a friend:   

Molex Demotes CEO, Hires New Auditor

Electronic parts maker Molex Inc. demoted CEO Joseph King, complying with the demands of its new auditing firm, and named co-chairman and former chief executive officer Frederick Krehbiel to return to the top post.

The former auditor, Deloitte & Touche, had resigned after the company rejected its demand that King and former chief financial officer Diane Bullock be removed from senior positions because the accountants said they could no longer rely on their representations in their audits.

Molex then was forced to file its quarterly report without review by independent auditors, which made it subject to potential delisting by the Nasdaq.

When Ernst & Young made the same demand as Deloitte, Molex complied.

Molex Demotes CEO, Hires New Auditor

Tell us what you think. (0) comments.
Send to a friend:   

Change in workload creates auditing tension

Accounting has always been demanding work, but the new laws and the increased workload has heightened the tension between companies and their accountants. The higher fees that followed the shake-up of the accounting industry with the collapse of Arthur Andersen in 2002 have led many companies to shop for new firms. And in the first nine months of 2004, Big Four accounting firms resigned from 157 accounts, according to data compiled by AuditAnalytics.com.

Change in workload creates auditing tension

Tell us what you think. (0) comments.
Send to a friend:   

Compliance causes little harm to firms

With reference to Terry Murden’s article on the cost of complying with Sarbanes-Oxley (Comment, November 28) a Booz Allen Hamilton study has revealed that compliance-related incidents are not a major cause of shareholder value destruction.

The study of 1,200 firms found that although companies are focused on compliance, more shareholder value has been destroyed in the past five years as a result of strategic mismanagement and poor execution than was lost in all of the recent compliance scandals combined.

It showed the causes of shareholder value destruction to be 13% compliance failures, 60% strategic mistakes (for example: misjudging demand, competitive pressure, management ineffectiveness) and 27% operational blunders (for example: cost overruns, poorly managed integration during mergers and acquisitions).

Compliance causes little harm to firms

Tell us what you think. (0) comments.
Send to a friend:   

Friday, December 10, 2004

Sarbanes-Oxley claim extension not retroactive: Court

Securities fraud plaintiffs whose claims expired before the July 2002 enactment of the Sarbanes-Oxley Act are not entitled to revive their claims, a 2nd U.S. Circuit Court of Appeals panel has ruled.

The Sarbanes-Oxley Public Company Accounting Reform & Investor Protection Act of 2002 extended the statute of limitations for filing private securities fraud lawsuits to the longer of two years from the date of occurrence or five years from the date of discovery. The previous statute of limitations was the longer of one year from the date of occurrence or three years from discovery.

Plaintiffs whose claims were time barred before the Sarbanes-Oxley Act went into effect on July 30, 2002, argued that the act retroactively applied to their claims. Therefore, they said, they should be allowed to pursue the claims.

Sarbanes-Oxley claim extension not retroactive: Court

Tell us what you think. (0) comments.
Send to a friend:   

Scanvec Amiable Files Form 15 to Deregister Common Stock (PDF)

Scanvec Amiable (OTC BB: SVECF), the recognized global leader in providing complete, professional software solutions from design to production for the sign making and large format digital printing industries, today announced that it had filed a Form 15 with the Securities and Exchange Commission to deregister its common stock and suspend its reporting obligations under the Securities Exchange Act of 1934. The Company expects the deregistration to become effective within 90 days of filing with the SEC. As a result of filing the Form 15, the Company’s obligation to file certain reports and forms including forms 10K, 10Q and 8K has been suspended and upon effectiveness will cease.

The Company expects to realize significant reductions in expenses (total expected annual savings of approximately $500,000) as a result of the suspension of its SEC reporting requirements like the substantial increase in those costs expected to arise in implementing and maintaining the requirements of the Sarbanes-Oxley Act of 2002.

Scanvec Amiable Files Form 15 to Deregister Common Stock (PDF)

Tell us what you think. (0) comments.
Send to a friend:   

Recent Trends and Changes in Merger and Acquisition Activities

In 2002, the United States adopted the Sarbanes-Oxley Act in response to the thenrecent scandals involving Enron, Arthur Andersen, Global Crossing, Tyco, WorldCom, Adelphia, and others. The Sarbanes-Oxley Act is very broad, covering, among other things, corporate responsibility, financial disclosures, corporate fraud, a new public company accounting oversight board, and auditor independence. The Sarbanes- Oxley Act is not only the most comprehensive federal lawmaking in the field of securities regulation in over 50 years, but it is also the most comprehensive Congressional lawmaking ever in the field of corporate governance. Although the Sarbanes-Oxley Act does not apply directly to merger and acquisition activity, it has affected the way in which all public companies - and all private companies who plan to go public in the next several years - approach transactions.

First, the Sarbanes-Oxley Act and recent corporate scandals in the United States have led to a much more cautious approach to financial reporting and methods of doing business, including the manner in which companies approach potential merger and acquisition transactions. In addition to making companies generally more risk-averse, these scandals have increased skepticism regarding the accuracy of companies. public filings. As a result, when acquiring a public company - or assets or a division of a public company - acquirors are performing more due diligence than ever before. Not surprisingly, companies also have increased their accounting due diligence of acquisitions involving non-public companies. Due diligence of such acquisitions is also made more difficult because many private companies do not have audited financial statements. In addition, there is a perception that the difference in scrutiny between audits of public and private companies has widened since the adoption of the Sarbanes-Oxley Act. This perception also has led to more intense accounting-related due diligence of acquisitions involving private companies.

Second, this generally increased level of caution has been reinforced by the provisions of the Sarbanes-Oxley Act that require CEOs and CFOs to personally certify the accuracy of their companies' financial statements. These certifications must accompany even quarterly, non-audited financial statements and, as a result, often apply to the financial results of acquired businesses prior to their being audited by the company for the first time. As a result, companies generally have insisted on doing more due diligence earlier in the transaction process and integrating businesses as fully as possible immediately after closing. These changes have led to both a greater emphasis on accounting due diligence and delayed the closing of transactions.

Recent Trends and Changes in Merger and Acquisition Activities

Tell us what you think. (0) comments.
Send to a friend:   

Core3 Earns SAS 70 Certification

Core3, a business process outsourcing firm specializing in finance and accounting, human resources and information technology outsourcing services, announced today that it has achieved SAS 70 Certification for its Delhi, India Service Center. PricewaterhouseCoopers conducted the thorough audit of the design, implementation and operating effectiveness of Core3’s internal controls.

“The SAS 70 certification ensures our clients that our outsourcing environment is stable and reliable and will also effectively meet the requirements of their auditors,” Gregg Scoresby, Chief Executive Officer of Core3, Inc. said.

SAS 70 stands for Statement of Accounting Standards No. 70 for Service Organizations, and is issued by the American Institute of Certified Public Accountants (AICPA). SAS 70 Reports have become a valuable tool for Sarbanes-Oxley compliance and other audit-related purposes. In a report issued earlier this year, the Securities and Exchange Commission (SEC) stated, “In situations where management has outsourced certain functions to third-party service providers, management maintains a responsibility to assess the controls over the outsourced operations. However, management would be able to rely on the SAS 70 report.”

Core3 Earns SAS 70 Certification

Tell us what you think. (0) comments.
Send to a friend:   

White Paper: Bearing Point and Microsoft on Sarbanes Oxley

A cascade of world events, emerging privacy concerns and new regulations is relentlessly intensifying the compliance requirements facing companies. Companies are taking varying approaches to meeting these requirements. Most are “protectionists,” who seek only to address specific requirements, such as Section 404 of the Sarbanes-Oxley Act, through targeted remediation and addressing critical control deficiencies. “Transformers,” on the other hand, are looking to extend remediation efforts to enable continual process improvement and long-term compliance.

A comprehensive view of Sarbanes-Oxley and other mandates—a view that recognizes the importance of controls and exploits the power of business performance management (BPM) tools and technology—can help an organization meet today’s expansive regulatory requirements, prepare for those seen and unforeseen in the future, and turn compliance into competitive advantage.

White Paper: Bearing Point and Microsoft on Sarbanes Oxley

Tell us what you think. (0) comments.
Send to a friend:   

SEC May Reject PCAOB $153 Million Budget, People Say

The U.S. Securities and Exchange Commission may reject a $153 million budget request from an accounting oversight board that gives employees average pay increases of 30 percent, people familiar with the matter said.

The average salary at the Public Company Accounting Oversight Board (PCAOB), led by William McDonough, would be $203,000 a year, said the people, who declined to be identified. That's about $60,000 more than the annual pay of SEC Chairman William Donaldson.

The SEC is reviewing a budget that more than doubled in the two years since its creation following the bankruptcies of companies including Enron Corp. and WorldCom Inc. As a nonprofit group funded by publicly traded companies, it has less incentive than government agencies to curb costs, said Peter Wallison, a resident fellow at the American Enterprise Institute in Washington.

"I just don't see that there is any effective control over this organization," said Wallison, a former White House counsel under President Ronald Reagan.

SEC spokesman Matt Well said the agency is "working very closely with the PCAOB on their budget." He declined further comment. The agency has the responsibility under the Sarbanes-Oxley law to approve the board's budget.

SEC May Reject PCAOB $153 Million Budget, People Say

Tell us what you think. (0) comments.
Send to a friend:   

European business steps up SEC battle

European business leaders have stepped up the pressure on the Securities and Exchange Commission to ease rules on companies that delist from US stock exchanges.


A delegation of European business leaders, including top officials from leading companies such as BASF and Siemens, told the SEC that US markets faced a growing international corporate backlash against the Sarbanes-Oxley corporate governance legislation.

In a meeting in Washington with William Donaldson, SEC chairman, the delegation urged the regulator to ease rules that compel companies to fully comply with US reporting requirements, including Sarbanes-Oxley, if they have more than 300 US shareholders.

They said there should be greater flexibility in these rules for companies that delist from US exchanges or do not have their shares traded in the country.

"If you believe in the philosophy of free markets and trade, you should allow people to leave if you change the rules," said Digby Jones, director-general of the Confederation of British Industry, who led the delegation.

Mr Jones said he was "encouraged by the openness" of SEC officials to calls for change. He said SEC had agreed to further high-level talks early next year.

European business steps up SEC battle

Tell us what you think. (0) comments.
Send to a friend:   

Trying to remember new passwords isn't as easy as ABC123

Security experts have long recommended that computer users choose hard-to-break passwords and change them frequently in order to frustrate hackers. Now, those recommendations are being newly forced on millions of U.S. workers in the name of preventing financial fraud under the Sarbanes-Oxley corporate-reform act.

The law, enacted in 2002 in the wake of accounting scandals at Enron Corp. and elsewhere, created an oversight body for audit firms, stiffened penalties for fraud, and required auditors to certify that firms have adopted adequate "internal controls" to prevent fraud.

No matter that Sarbanes-Oxley doesn't actually require changing passwords: In the name of those "internal controls," auditors and consultants are prodding companies to require that employees pick tougher passwords, and change them more frequently.

But the zeal for impenetrable computer systems rubs up against the limits of human systems. To cope with repeated changes to multiple passwords, many users adopt strategies that actually thwart security.

Trying to remember new passwords isn't as easy as ABC123

Tell us what you think. (0) comments.
Send to a friend:   

Thursday, December 09, 2004

'Continuous' Will Be Key to Compliance

Can continuous auditing help bring companies into compliance with Sarbanes-Oxley and other regulations -- and can it do so more effectively and efficiently than alternative approaches to corporate governance? Although this question may be slightly ahead of its time, early adopters of the "continuous" concept are nodding their heads in response to it.

Coined by an academic more than 20 years ago, the term "continuous auditing" describes a broad range of approaches to both internal and external audit that enable companies to stay on top of their controls.

Paul Herring, director of business reporting, assurance and advisory services for the American Institute of Certified Public Accountants (AICPA) in New York City, sees audit options on a continuum. The traditional annual audit resides at one end of that line, while the opposite end is occupied by companies that maintain a perpetual connection with their external auditor. Herring emphasizes that a wide array of possibilities exist between those two extremes.

"Continuous" Will Be Key to Compliance

Tell us what you think. (0) comments.
Send to a friend:   

Tech companies struggle with Sarbanes-Oxley

Small tech companies are howling as they scramble to comply with the Enron-inspired Sarbanes-Oxley corporate governance act.

Smaller tech firms say the act, designed to prevent accounting fraud, creates busywork that drains resources — and shareholders' pockets. "All of this is really just paper-pushing," says David Anastasi, CEO of business software maker Captaris. "I haven't met one investor that thinks it's a good thing."

The 2002 law affects all public companies. Tech firms with 500 employees or less say they're particularly hard hit because they run fast and lean. They warn of added bureaucracy and stifled innovation. "It's a drag on entrepreneurial companies," says Brian Henry, CFO of Bellevue, Wash.-based Onyx Software.

Tech companies struggle with Sarbanes-Oxley

Tell us what you think. (0) comments.
Send to a friend:   

Court Defies SEC, Upholds Limitations on Expiring Fraud Claims

Before Sarbanes-Oxley, the law stated that investors who were made aware of fraudulent activities had to file lawsuits against the misbehaving companies within one year of discovering the fraud and within three years of the actual fraudulent activity. The Sarbanes-Oxley Act of 2002 (SOX) extended the time period for filing claims to two years from the discovery and five years from the fraudulent activity.

But on Monday, December 6, 2004, the Second U.S. Circuit Court of Appeals ruled that, due to ambiguous language in SOX regarding the effective dates of the time periods and the fact that there is no clear information as to the intent of Congress on the issue, there is no precedent for making the claim period retroactive.

Court Defies SEC, Upholds Limitations on Expiring Fraud Claims

Tell us what you think. (0) comments.
Send to a friend:   

SEC open to delisting for UK companies

Delisting from US markets should be easier for UK companies struggling with the burdens of Sarbanes-Oxley, according to a key figure at the US Securities and Exchange Commission.

Alan Beller, director of the corporation finance division at the SEC, said that the regulator's 300-shareholder rule, which has forced many companies to maintain their US listing and has been labelled 'arcane' by the New York Stock Exchange (pictured), should be relaxed to a certain degree.

'For me there is no quarrel that companies should be able to come into and go out of markets as they wish,' said Beller. 'But there is the significant issue of investor protection, and we have to balance the two.'

Currently, many non-US companies trading on American exchanges are looking at the possibility of delisting to avoid the large costs of compliance with the Sarbanes-Oxley Act and, in particular, the resource-straining section 404 on internal control.

SEC open to delisting for UK companies

Tell us what you think. (0) comments.
Send to a friend:   

Wednesday, December 08, 2004

GTP and Relational Security Partner to Streamline Third-Party Security Audits Required Under Such Regulations as SOX and GLB

Greenwich Technology Partners (GTP®), today introduced a new service that helps financial service firms cut the time and expense required for security audits of Third-party Service Providers. GTP is a leading global provider of IT Professional Services, and Relational Security, a provider of Risk Assessment and Ongoing Compliance Management Software

Under regulations such as Sarbanes-Oxley and the Gramm-Leach Bliley Act, financial service firms are responsible for maintaining prudent security controls for regulated data, even when outsourcing key functions to Third-party Service Providers (TSPs). As a result, firms find themselves spending tremendous amounts of time and money performing security audits of TSPs to ensure compliance.

Using Relational Security’s RSAM™ security assessment and ongoing compliance software, GTP has created custom tools for TSP audits based on the BITS IT Service Providers Expectations Matrix. The Expectations Matrix was created by the nation’s leading financial institutions through BITS, a nonprofit industry consortium founded in 1996 to foster the growth and development of electronic financial services and e-commerce for the benefit of financial institutions and their customers. The matrix outlines in detail financial institution expectations for the security of information and personnel, as well as policies and processes for ensuring physical security, including critical disaster recovery/business continuity issues. (For more information about BITS visit the BITS website at www.bitsinfo.org. The Expectations Matrix is available for free download at www.bitsinfo.org/wp.html.) These tools allow GTP consultants to audit TSPs rapidly and accurately, producing detailed reports suitable for submission to internal or external auditors at a competitive cost.

GTP and Relational Security Partner to Streamline Third-Party Security Audits Required Under Such Regulations as SOX and GLB

Tell us what you think. (0) comments.
Send to a friend:   

Small Companies Get a Break on Sarbox Compliance

The Securities and Exchange Commission has granted a 45-day extension for some companies to comply with the internal controls portion of the reporting requirements under the Sarbanes-Oxley Act. The extension applies to companies whose market capitalization is in the range of $75-$700 million.

As companies' fiscal years come to a close, many are facing the financial reporting requirements of the Sarbanes-Oxley Act for the first time. But some small and mid-size firms have gotten a slight reprieve.

The U.S. Securities and Exchange Commission has granted an extension of 45 days on the internal controls portion of the reporting requirements to companies with a market capitalization in the range of US$75 million to $700 million.

Small Companies Get a Break on Sarbox Compliance

Tell us what you think. (0) comments.
Send to a friend:   

Ex-SEC chief lauds reforms

With the economy improving and the stock market near a three-year high, corporate America might be tempted to ease up a bit when it comes to reforming business practices. But as Arthur Levitt Jr. sees it, the cleanup effort must continue.

The former Securities and Exchange Commission chairman and investor advocate repeated his support for the Sarbanes-Oxley Act during a visit to Phoenix on Tuesday, the same day a new survey showed Arizona executives are frustrated with the legislation.

Crafted in the wake of scandals at Enron Corp. and other companies, Sarbanes-Oxley instituted several key reforms. These included new powers for independent directors and auditors, requirements that chief executive officers personally sign off on financial statements and obligations that companies implement strict operational controls. advertisement

But the rules also have driven up costs and record-keeping chores that have proved burdensome for public companies, especially smaller ones.

No wonder a survey of Valley executives revealed tepid support for Sarbanes-Oxley.

Ex-SEC chief lauds reforms

Tell us what you think. (0) comments.
Send to a friend:   

Improving accountability - boardroom inspection

Transparent accountability is a prerequisite for informed oversight. The board accounts so that shareholders or other stakeholders can be in control. The audit is a necessary confirmation of the reliability of the accounting. Without audit, there is no accountability. Without accountability, there is no control. And if there is no control, where is the seat of power?

As more specific responsibilities of directors have been codified, there has been a corresponding expansion of their reporting obligations. And since boards now have overall responsibility for risk management and internal control, directors report publicly on how they exercise that responsibility.

But the audit profession has not been quick off the mark to develop new assurance services that correspond to the expansion of disclosure obligations. With some reluctance the profession took on the task of 'reviewing' directors' assertions on just seven of the 19 provisions within the 1992 Cadbury Code - a 'review' is much less than an audit.

After a decade of intricate debate, the audit of internal control - at least in the US - has finally arrived. The Sarbanes-Oxley Act has imposed an obligation on auditors to attest to the CEO's and CFO's certification of the effectiveness of internal control over financial reporting. It questions whether the CEO and CFO have followed a proper process, as set out in the SEC rule, and whether the external auditor agrees with the conclusions.

Improving accountability - boardroom inspection

Tell us what you think. (0) comments.
Send to a friend:   

Watchdog to hire 100 enforcers

South Africa’s Financial Services Board (FSB) has been given approval to increase its staff count by 40% over the next three years, as it moves into an era of enforcement.
FSB CEO Jeff van Rooyen says the FSB’s staff count is set to increase to around 350, from its current count of 250. The FSB is regulates South Africa’s non-banking financial services industry, which includes life insurance, retirement funds and collective investment schemes.

The FSB, which reports to finance minister Trevor Manuel, also regulates capital markets, which includes all of South Africa’s exchanges; it also oversees insider trading. Despite ongoing successes in a number of high profile insider trading cases, the FSB has sometimes been criticised for failing to react to known irregularities in the areas it regulates.

In addition, government last week published the Auditing Professions Bill, which contains many elements of the US’s well-known Sarbanes-Oxley Act, insofar as it applies to accountants and auditors. The Bill has so far been applauded as another step in upgrading standards of corporate governance in South Africa.

Watchdog to hire 100 enforcers

Tell us what you think. (0) comments.
Send to a friend:   

Accounting Firm Trades In SEC Practice for Governance Practice

Many accounting firms expanded into providing corporate governance services in the wake of the Sarbanes-Oxley Act of 2002, but very few have also divested themselves of their own public company clients.

Citrin Cooperman & Company, LLP, the nation’s 37th largest accounting firm, didn’t immediately jump on the bandwagon when it became apparent that internal control audits and other SOX-related issues were going to reap great financial rewards for accounting firms.

Instead, when the firm made the decision in 2002 to give up its SEC practice altogether, it spent time studying whether it would be advantageous for the firm to be active in the corporate governance arena.

This week, the firm made the decision to offer clients this value-added service, hiring corporate governance veteran, Michael Rhodes, to lead a corporate governance practice that will focus on offering Section 404 compliance and other corporate governance services to public, private and non-profit companies.

A CPA and veteran consultant on finance and accounting initiatives, Rhodes, who started Monday as Director - Corporate Governance, most recently worked at a large consulting firm where he focused on SOX compliance, business process reengineering, financial and accounting system implementation and other CFO advisory services.

Accounting Firm Trades In SEC Practice for Governance Practice

Tell us what you think. (0) comments.
Send to a friend:   

Tuesday, December 07, 2004

SEC May Delay Reviews (washingtonpost.com)

A Securities and Exchange Commission official yesterday signaled that the agency may grant foreign companies whose stock trades on U.S. exchanges a brief delay to comply with a controversial accounting reform.

SEC Chief Accountant Donald T. Nicolaisen said he is "sensitive" to the burdens that foreign companies already face as they try to meet deadlines starting in July to review and attest to the strength of their financial safeguards.

Experts say reviewing internal controls, such as restrictions on employees' computer access to important financial data, will help cut down on fraud and financial mistakes that hurt investors. The reform is one of the most costly and time-consuming to be imposed under the 2002 Sarbanes-Oxley Act. The SEC last week gave companies with market value between $75 million and $700 million an extra 45 days to meet their accelerated deadlines, which began Nov. 15.

"We have and continue to be sensitive to the need to accommodate unique foreign structures and requirements," Nicolaisen told an audience attending the American Institute of Certified Public Accountants' national conference in the District. "Clearly many non-U.S. issuers and their auditors are working hard and are well on their way to completing the work necessary to report on internal controls. However, I am sensitive that this requires, in some cases, great cultural change."

SEC May Delay Reviews (washingtonpost.com)

Tell us what you think. (0) comments.
Send to a friend:   

New App Automates Key Step Mandated By Sarbanes-Oxley

Security-software maker Virsa Systems Inc. is pushing an app it says will help companies remain in compliance with stringent Sarbanes-Oxley Act provisions. Access Enforcer version 1.2 does two things: It creates an automated and customizable workflow procedure for giving employees access rights to SAP. As part of the automated provisioning of an employee, a risk assessment is automatically done to make sure a worker doesn't get access rights that would violate Sarbanes-Oxley.

For example, one person isn't allowed to both create a vendor account and pay bills associated with that account. Some in the past have set up a dummy account, paid company money into the account, and collected the money themselves.

Andy Smith, product-marketing manager for Virsa, says too many companies are going through their access rights to make sure they don't have conflicts, but they're doing it manually and some will probably forget about doing it again.

New App Automates Key Step Mandated By Sarbanes-Oxley

Tell us what you think. (0) comments.
Send to a friend:   

Monday, December 06, 2004

Think Sarbanes Oxley extension changes things? Think again

Some IT folks are comparing Sarbanes Oxley Act (SOX) regulation compliance to the Y2K computer craze. In both cases IT departments have been overwhelmed by the complexity and costs of multiple systems changes. And with loads of other business priorities being temporarily shoved aside for companies locked in both Y2K and SOX mania, the tradeoffs have been profound.

But that's where the similarities end. CIOs knew within minutes after midnight on Jan. 1, 2000, if all their Y2K work had paid off. In contrast, parts of the SOX legislation are so vague that 32% of IT workers and 53% of board directors, recently surveyed by Foote Partners, seriously doubt whether their companies would -- or even could -- have been compliant by the end of their fiscal year. The federal government has now pushed the Nov. 15, 2004, deadline to 2005. Another big difference: There will be substantial annual SOX-related compliance costs for many years to come, absent in the case of Y2K.

To shed some light on what comes next for the IT department once the SOX deadline arrives, my firm queried 197 business and IT executives and board directors, representing a cross section of public companies of various industries and sizes. Here are highlights from what we heard...

Think Sarbanes Oxley extension changes things? Think again

Tell us what you think. (0) comments.
Send to a friend:   

Sarbanes-Oxley for feds?

Officials will unveil new governmentwide guidance on federal agencies' assurances of financial management integrity before January, said Linda Springer, the Office of Management and Budget's controller.

The new regulations, which will become mandatory in fiscal 2006, will govern "everything that generates entries into your financial statement," Springer said. That includes "data going into the system, the way the system functions itself and then data coming out of the system into the [year-end] reports themselves."

OMB officials want to ensure the reliability of financial statements, Springer said.

The stricter standards will be printed in OMB circular A-123, Springer said. The circular governs implementation of the Federal Managers' Financial Integrity Act, which requires agency officials to annually report the effectiveness of their internal accounting and administrative controls.

Sarbanes-Oxley for feds?

Tell us what you think. (0) comments.
Send to a friend:   

Cendura Automates Sarbanes-Oxley Compliance for Oracle Financials

Cendura, a leader in continuous IT control solutions for enterprises, (www.cendura.com), today announced at Oracle OpenWorld that the company will provide application configuration, change and compliance management support for the Oracle E-Business Suite, the first module of which will be Oracle Financials. The product, Cohesion Suite for Oracle Financials, provides Global 2000 organizations with the ability to meet requirements for Sarbanes-Oxley compliance, execute advanced change and configuration management, view detailed inventory of assets and related dependencies, perform policy-based application management, and create IT controls to ensure application performance and stability.

"We have helped hundreds of companies deploy Oracle E-Business Suite and consistently see the need to automate services configuration management, provide regulatory compliance IT controls, ensure rapid recovery for disaster planning, and help to maintain the stability of the Oracle E-Business Suite including Oracle Financials," said Marc Hebert, EVP of Sierra Atlantic, a long-time Oracle Partner. "We think it makes so much sense for companies that have a significant investment in Oracle E-Business Suite to use Cendura for these needs. We're excited about taking this solution to all of our clients who will reap significant benefits quickly."

Cendura Automates Sarbanes-Oxley Compliance for Oracle Financials

Tell us what you think. (0) comments.
Send to a friend:   

Virsa Systems Introduces Automation of Internal Controls and Sarbanes-Oxley Compliance (PDF)

Virsa Systems, the leader in real-time security and controls software, today announced the release of Access Enforcer™ v1.2, a web-based component of Virsa’s market leading Continuous Compliance™ Suite. The Sarbanes-Oxley Act mandates that companies document a framework and system to verify the effectiveness of internal controls and the accuracy of financial information. To comply with these regulations, companies have spent millions of dollars to document controls and remove real and potential control violations. Most companies have allocated this expenditure to one time cleansing of their ERP systems. Relatively few companies have an automated mechanism to prevent violations from re-entering their systems. Without this, they face an endless cycle of system clean-up.

Access Enforcer™ automates the user request and approval process for system access, while incorporating a real-time assessment of risk and the ability to alter or reject the request to prevent controls violations. Automated workflow and self-service password re-set immediately reduces security and help desk cost, while the proactive risk assessment reduces exposure. The ROI is immediate and apparent.

Virsa Systems Introduces Automation of Internal Controls and Sarbanes-Oxley Compliance (PDF)

Tell us what you think. (0) comments.
Send to a friend:   

Sarbanes-Oxley: An Opportunity for Security Professionals

Sarbanes-Oxley (SOX) is not just another regulation security professionals have to contend with in your already very busy lives. Instead, SOX should be viewed as opportunity for security teams to demonstrate your value as a key enabler of creating a sound business environment at the highest levels within your organizations. SOX presents this opportunity to every company, whether already a public entity that has to comply or private companies who fall outside mandated compliance, by providing a model for sound internal controls and a template to demonstrate the effectiveness those controls to executive management.

The first way SOX helps to demonstrate the importance of information security is that the regulation emphasizes the importance of your business critical systems. Executives typically think about sales, marketing and other revenue-centric business units when looking for ways to improve their business. However, they often overlook the critical systems that enable these units to effectively generate demand. SOX specifically points to these systems and raises the awareness of their criticality by making executives attest to the accuracy of their company's reported financial information. This attestation forces executives to ask questions regarding the activity on these systems and whether or not this activity could have altered the information they are receiving.

Sarbanes-Oxley: An Opportunity for Security Professionals

Tell us what you think. (0) comments.
Send to a friend:   

EU executive to pause with new securities rules

The European Commission plans to take a pause in financial market regulation and does not expect to unveil any major proposals in this area in 2005, EU Internal Market Commissioner Charlie McCreevy said on Monday.

McCreevy, a former Irish Finance Minister at his first public appearance as EU internal market chief, delivered a speech in which he confirmed his aversion for overregulation.

"I cannot promise that there will be no proposals from the Commission during my mandate. But I can at least reassure you that I do not envisage bringing forward any major ... proposals aimed at securities markets during 2005," McCreevy said at a conference of the Committee of European Securities Regulators.

EU executive to pause with new securities rules

Tell us what you think. (0) comments.
Send to a friend:   

Globetechnology: Who is in charge of the IT henhouse?

CEOs of most U.S. public companies and Canadian companies listed in the U.S. are now required to sign off on financial statements, and the adequacy of internal financial controls under the Sarbanes Oxley Act (SOX).

Facing stiff fines and jail time if they get it wrong, the stakes are extremely high. And yet the recent unceremonious ouster of Citibank from the Japanese market proves how easy it is to end up on the wrong side of regulators, with devastating consequences.

Smarting from criticism that they were sleeping on the job, or too cozy with industry participants during the dot-com bust, regulators are finding new muscles to flex, and politicians are anxious to shore up waning confidence in capital markets.

Regulators have identified the prevalence of IT and complex systems as risk factors that need to receive greater management attention. They fear that data intensive sectors such as financial services could be irretrievably damaged by catastrophic IT failures or cyber attacks.

Thus, a plethora of new legislation has emerged, essentially mandating the assessment and management of IT risk, including security risk.

Globetechnology: Who is in charge of the IT henhouse?

Tell us what you think. (0) comments.
Send to a friend:   

Auditors body queries internal auditors' competency

The internal audit function is one of the cornerstones of good corporate governance. In the wake of recent corporate mis-reportings, there have been calls to tighten the rules governing internal auditors.

The IIAS says it favours the tightening of rules and it hopes to see some legislation along the lines of the Sarbanes Oxley Act in the US incorporated here. But the biggest gap right now is the absence of rules to ensure that only adequately trained and qualified people work as internal auditors.

Lilian Tay, president of the Institute of Internal Auditors Singapore, said: "Right now in Singapore there is no legislation for internal auditors. There is no qualification standards for internal auditors. As it stands now, anybody can be an internal auditor. They are not governed by legislation or any qualifications, unlike the CPA for example."

And the same for goes for independent directors.

Lilian Tay said: "The way that Singapore companies are placing directors may not necessarily provide for that competency. Again, there is no qualification criteria for independent directors. And there's no need for independent directors to be associated with, for example, the Institute of Internal Auditors body."

Auditors body queries internal auditors' competency

Tell us what you think. (0) comments.
Send to a friend:   

The sheriff's shadow over Wall Street Brits

THE long arm of American lawmakers has finally reached into British boardrooms and, if you believe recent squeals, UK companies are about to revolt and quit the US stock market in droves.

The law in question is the Sarbanes-Oxley Act, introduced in the wake of the Enron and WorldCom scandals. The Act requires board members to swear an oath that their accounts are accurate and demands that they have in place checks to assess internal financial controls on an almost constant basis.

This is, of course, US law, but the 72 British companies whose shares are listed on Wall Street are duty bound to comply. They range from banking giant HSBC to smaller firms such as computer games group Eidos. Their complaint is simple: Sarbanes-Oxley costs a fortune to implement - £450m according to management consultant Parson - and it does nothing to improve financial security at British companies.

The sheriff's shadow over Wall Street Brits

Tell us what you think. (0) comments.
Send to a friend:   

Auditors detail gripes at Molex

A seemingly small accounting dispute unfolding at Molex Inc. suggests that landmark reform legislation known as Sarbanes-Oxley may finally be turning some outside auditors from corporate lapdogs into investor watchdogs.

In a little-noticed filing with the U.S. Securities and Exchange Commission (SEC) last week, a letter to Molex from Deloitte & Touche LLP reveals significantly more than was previously public about the dispute. New York-based Deloitte quit as Molex's auditor Nov. 13 after informing the board of the Lisle company that it didn't trust Molex CEO J. Joseph King.

The dispute centers on $8 million in inventory that apparently had been counted twice on Molex's books, as it moved from one unit to another. The electronic components maker took a pre-tax charge equal to that amount in the fiscal first quarter ended Sept. 30 to clear up the discrepancy. But Deloitte says in its letter that Molex knew the size of the inventory problem back in July and withheld that information from Deloitte until October. The firm implies that the charge should have been taken in the fiscal fourth quarter ended June 30. Molex announced its fiscal fourth-quarter and fiscal year results at the end of July.

Auditors detail gripes at Molex

Tell us what you think. (0) comments.
Send to a friend:   

Encore Provides SOX 404 Update

Encore Capital Group, Inc. (Nasdaq:ECPG), a leading accounts receivable management firm, today provided an update of the status of its efforts to comply with Section 404 of the Sarbanes-Oxley Act, commonly referred to as "SOX," which requires companies to satisfy certain internal controls requirements. In substance, Section 404 requires annual management assessments of the effectiveness of the company's internal controls over financial reporting, and a report by its independent auditors addressing these assessments.

The rules implementing SOX require that "accelerated filers" comply with the new Item 404 requirements for the fiscal year ending December 31, 2004. Non-accelerated filers have until the end of 2005 to comply with these new rules. Effective June 30 of this year, Encore became an "accelerated filer" under the SEC's guidelines because of its significant share price appreciation, as well as the increased float resulting from the Company's October 2003 public offering.

Encore reported that it has a plan to satisfy SOX 404 requirements for the fiscal year ending December 31, 2004 which it is aggressively pursuing, and recently added additional resources dedicated to this task. The Company also noted, however, that it may not be able to timely achieve all of the objectives of the rule for this fiscal year.

Encore Provides SOX 404 Update

Tell us what you think. (0) comments.
Send to a friend:   

Saturday, December 04, 2004

Sarbanes Oxley End User Computing Controls - www.axiominternet.com

End-user computing introduces a different level of risk to a company’s information technology and operational environment under Sarbanes Oxley. End-user computing generally involves the use of department-developed spreadsheets and databases, which are frequently used as tools in performing daily work. To the extent these spreadsheets are in place, they are an extension of the IT environment and results generated from them may, in assessing their impact, have an effect on the company's financial statements. Some Spreadsheets Best Practice Guidelines are at: http://www.treasury.govt.nz/dice/reports/rev-spreadsheets.pdf. A listing of Sarbanes Oxley Information Technology resources is at http://www.projectbailout.com/PM/Sarbanes-Oxley-IT.htm or at www.projectbailout.com. End User Computing can be audited and control by manual process; using automated tools; or by the ideal method eliminating the need for end user computing by add the computations to systems controlled by information technology.

End User Computing Auditing includes: 1) Identifying any and all spreadsheets/databases that are in use which form the basis for reports, data used in performing duties, or result in creating financial data/transactions in your area of responsibility. 2) Locating of the spreadsheet/database on the network, the drive and server location or if on a desktop, who has a copy of it or uses the spreadsheet in conducting their duties 3) Determining who has access to the tool or has a current copy/version of it.

Sarbanes Oxley End User Computing Controls

Tell us what you think. (1) comments.
Send to a friend:   

Friday, December 03, 2004

AMR Research: SEC Gives Smaller Firms a Little SOX Breathing Room

On November 30, 2004, the U.S. Securities and Exchange Commission (SEC) issued an executive order that gives some additional breathing room to smaller firms that must comply with internal controls provisions stipulated in the Sarbanes-Oxley Act of 2002 (SOX). But the extension is limited—only 45 days—and applies to accelerated filers with market capitalization between $75M and $700M whose fiscal years close between November 15, 2004 and February 28, 2005.

The Bottom Line: Companies that qualify for this SOX extension have an additional 45 days to include management’s report on internal control over financial reporting and the related auditor’s report on management’s assessment of internal control over financial reporting.

What It Means: An analysis of public company information indicates that there are over 2,600 companies with market caps between $75M and $700M. A subset of these companies has closing dates between November 15, 2004 and February 28, 2005.

The Takeaway: We expect this ruling to affect over 1,500 companies.

AMR Research: SEC Gives Smaller Firms a Little SOX Breathing Room

Tell us what you think. (0) comments.
Send to a friend:   

Europeans fall out of love with listing in New York

The catalyst has been the Sarbanes-Oxley corporate governance legislation introduced in the wake of Enron's collapse, which has sparked a belated outcry among European companies.

At a time when they are already struggling to cope with complex new international accounting standards, many say the additional 'onerous' demands of meeting Sarbanes-Oxley requirements see the costs of a US listing outweigh the benefits.

'If we knew Sarbanes was coming, we would never have listed there in the first place,' says a finance director of a top FTSE 100 company. However, just as significant in the Europeans' re-assessment of their US listings has been the increasing numbers of institutional investors investing outside their home market.

In the past, many US institutional shareholders were precluded from venturing abroad by mandates agreed with their clients.

But such restrictions are now rarer. 'You don't have to have a US listing to have a significant US shareholder base any more,' says Mike Lynch, chief executive of Autonomy, a UK software company planning to delist from Nasdaq next year.

Europeans fall out of love with listing in New York

Tell us what you think. (0) comments.
Send to a friend:   

Where's That Quarterly Report?

If medicine sometimes has to taste bad to be good, then the bitter tonic companies are swallowing as they clean up their financial reporting ought to work wonders. Rigorous new examinations prescribed by the Sarbanes-Oxley Act are making it hard for executives to close their books and report their financial results to the Securities & Exchange Commission on time. In just one week in early November, 61 companies with a market cap of $100 million or more announced they would be late with their filings, including info-tech giant Electronic Data Systems (EDS ), General Motors (GM ), and Suntrust Banks (STI ). That was up 25% from the same period a year ago, according to Glass, Lewis & Co., an independent researcher.

There has been no letup in the trend. Since then, mortgage giant Fannie Mae (FNM ) filed notice that it would be late as well. The problem isn't confined to big companies, either. Smaller outfits, such as restaurant chain Benihana Inc., have found themselves in the same boat.

More problems are likely to surface in the weeks leading up to Mar. 15. That's the first deadline for executives of large companies with calendar fiscal years to certify that they've checked and found their internal financial controls are working. Outside auditors also will have to issue their own certification. Before the next year is out, says Dennis M. Nally, chairman and senior partner of PricewaterhouseCoopers, 10% to 20% of all U.S. companies may uncover weaknesses in their controls. Some of them will have to delay their reports while they work out whether the weaknesses have created big errors in their numbers.

Where's That Quarterly Report?

Tell us what you think. (0) comments.
Send to a friend:   

Beyond the audit horizon

Unannounced as it may have been, South Africa is about to get its own version of Sarbanes-Oxley. This US statute, which became law in 2002, is a household name in global financial circles, and is seen as a model for changing the world of securities for the better, forever.

There are notable overlaps between Sarbanes-Oxley and the Draft Auditing Profession Bill, 2004, that the South African government released this week. The Bill is open for discussion until February next year, after which it is all but certain to become law.

Like Sarbanes-Oxley, the Bill is aimed at taking all known steps to restore public confidence in the capital market system, and in the accounting and auditing profession. However, it remains clear that Sarbanes-Oxley and the Bill are dealing with some of the most complex areas in the investment world and also ultimately, with the oft-unknown inner reaches of the human psyche.

Beyond the audit horizon

Tell us what you think. (0) comments.
Send to a friend:   

British Industry - Accountancy & audit

And like much originating in the United States, the repercussions of this titanic debacle were felt immediately on this side of the Atlantic. If Britain had been spared the financial sleight of hand that undid Enron and WorldCom, our own Government had little choice but to undertake some (as it turned out, modest) re-tuning of its own, once the US started to clean up Wall Street and company boardrooms.

Kevin Narain, lead practice director, Europe, with City-based Parsons Consulting, observes in the impact and reverberation of Sarbanes-Oxley the emergence of 'a rich seam in the ever-expanding gold mine of non-audit advisory services.' And the accountancy industry itself has hardly been caught flat-footed. 'While conflicts of interest are supposed, ostensibly to prevent external auditors from ‘cashing in’ on Sarbanes compliance from their clients, a whole new industry has developed, with accounting firm A helping company B (a non-audit client) and accounting firm B helping company A, etc.'

British Industry - Accountancy & audit: "Sarbanes"

Tell us what you think. (0) comments.
Send to a friend:   

Attendees at HFTP's Hospitality Technology Professionals Forum Discuss Hot Industry Topics

The Sarbanes-Oxley discussion, facilitated by Sally Kelly, senior manager at Bearing Point, Incorporated, proved to be very informative providing an overview of the Act, additional online references and allowed for a constant flow of questions. It was explained that the goal of the Sarbanes-Oxley act is to ensure financial visibility throughout each section of a firm. Companies need to report any discrepancies within four days to the government, and at any given time, it will have to be able to notify auditors where they stand financially at that exact moment. Some difficulties for major corporations is that they have many different departments, which making it hard to incorporate. Also certain guidelines for this massive implementation are still under negotiation. Even though private firms are not required to meet the December 31 deadline, it is still legislation that will eventually have to be dealt with.

Attendees at HFTP's Hospitality Technology Professionals Forum Discuss Hot Industry Topics

Tell us what you think. (0) comments.
Send to a friend:   

Microsoft changes Office Solution Accelerator pitch

Microsoft is not discarding its existing Solution Accelerators. The accelerators for Sarbanes-Oxley, Six Sigma, Proposals and Recruiting will be featured on the showcase Web site and Microsoft will make the source code for these accelerators available, Ajenstat said.

Microsoft will not provide the source code for the Business Scorecards accelerator or the Excel Add-in for SQL Server Analysis Services, although these will be in the showcase, Ajenstat said. Microsoft is holding on to the source code as the business intelligence-type capabilities fit with other Microsoft products, he said.

While Microsoft will be providing less code, the showcase will offer more examples of expanded uses of Office, for example for invoice management, performance reviews, contract generation and investment banking pitch books, Ajenstat said.

Many of the examples on the showcase will feature Microsoft partners. That suits Adriaan van Wyk just fine. Van Wyk is chief executive officer of SourceCode Technology Holdings Inc., in Redmond. SourceCode sells a business process automation product called K2.net that takes advantage of Microsoft applications, including Office.

Microsoft changes Office Solution Accelerator pitch

Tell us what you think. (0) comments.
Send to a friend:   

Avotus helps companies implement internal controls to meet Sarbanes-Oxley requirements

Avotus® Corporation (TSX Venture: AVS), with its Intelligent Communications Management™ (ICM), offers a means to aggregate, monitor and analyze voice and data communications expenses in order to help companies meet Sarbanes-Oxley reporting requirements.

Communications is often cited as one of the top five expense lines for companies. It is also one of the least controlled expense areas, with industry analysts estimating that 7%-12% of communications bills are paid in error. This uncontrolled accounts payable situation carries potential liabilities for companies that do not implement adequate internal controls.

Commented Alan Gold, Avotus Corporation's senior vice president, marketing and corporate strategy, 'Many companies are wrestling with both the complexity and the cost of compliance of Sarbanes-Oxley. Yet, they have not even begun to address one of their least understood expense lines - communications. That means that at the end of every fiscal period, company executives are put in a position of signing off on substantial expenditures with minimal visibility into their validity or accuracy. Fortunately, Avotus specializes in providing the means to analyze and control communications expenses to meet SOX requirements. Additionally, we enable management to implement new processes that are based on best practices that utilize actual usage and costs, not speculation or previous trends.'

Avotus helps companies implement internal controls to meet Sarbanes-Oxley requirements

Tell us what you think. (0) comments.
Send to a friend:   

Scott Studios Announces Sarbanes-Oxley Compliance Support Through SS32 and MAESTRO Digital Systems

Scott Studios, LLC., a wholly-owned subsidiary of dMarc Broadcasting, Inc. and the leading digital air studio systems vendor in the US, with over 4,600 radio station clients, today announced its Sarbanes-Oxley Compliance support through its SS32 and MAESTRO digital systems.

The Scott Studios Sarbanes-Oxley (SOX) Upgrade to SS32 and MAESTRO is designed to help bring stations into compliance with the 2002 Sarbanes-Oxley legislation. The Upgrade consists of two key components, a free software upgrade to SS32 and MAESTRO for all existing customers, which enables the creation of tamperproof air log files, and the dMarc Network Upgrade which generates broadcast group level reports showing which stations have activated tamperproof logging, those who have not, and a running history for each; all in real time.

Scott Studios Announces Sarbanes-Oxley Compliance Support Through SS32 and MAESTRO Digital Systems

Tell us what you think. (0) comments.
Send to a friend:   

Thursday, December 02, 2004

SEC blocks Sarbox escape from US

UK companies planning to delist from US exchanges to avoid the compliance costs of Sarbanes-Oxley risk breaking SEC rules - a situation that could result in company directors facing jail terms and fines.

UK companies listed in the US are caught in a compliance trap and will find it 'almost impossible' to avoid the onerous burdens of Sarbanes-Oxley - even if they delist.

While several UK companies are threatening to withdraw from US exchanges due to the costs associated with adhering to Sarbox, only the very smallest will have any chance of carrying out this threat without enormous costs and trouble.

SEC blocks Sarbox escape from US

Tell us what you think. (0) comments.
Send to a friend:   

Sarbanes-Oxley Act met with resounding, 'What?'

When President Bush signed the Sarbanes-Oxley Act two years, he declared, "No boardroom in America is above or beyond the law."

The act quadrupled sentences for accounting fraud and created a corporate fraud felony charge that carries a 25-year prison term. "No more easy money for corporate criminals -- just hard time," Bush vowed.

Despite the attention the president brought to Sarbanes-Oxley, it seems the general public doesn't follow corporate fraud with quite the same zeal as, say, a bench-clearing brawl in the NBA.

Sarbanes-Oxley Act met with resounding, 'What?'

Tell us what you think. (0) comments.
Send to a friend:   

Gee, Thanks: More Time in the Maze

The reality of the "Law of Unintended Consequences" finally dawned on the Securities & Exchange Commission as it gave a filing extension to small companies trying to comply with the requirements of the Sarbanes-Oxley Act. Companies with a market value of less than $700 million will get 45 days more to get their paperwork in order.

Last month Fool contributor Tom Taulli highlighted the nightmare many small companies were facing in trying to comply with the sweeping mandate of the supposed "shareholder friendly" legislation: compliance costs disproportionately high, IPOs not coming to market, public companies even going private. Bill Mann noted that companies with less than $100 million in revenues could face compliance bills of $500,000 or more and said the law is creating a procedural maze that's difficult to follow.

Gee, Thanks: More Time in the Maze

Tell us what you think. (0) comments.
Send to a friend:   

New rules go too far

From the beginning, the U.S. Chamber of Commerce has welcomed strong action to catch lawbreakers, enhance market transparency and restore investor trust. However, the pendulum has swung too far. Regulators impose rules that reach beyond the intent of the 2002 Sarbanes-Oxley accounting reform law without regard to empirical data, deliberation or any serious thought to the unintended consequences. And corporate directors and managers are being pressured to settle allegations of misconduct without a trial and the protections of due process.

Talented leaders are turning down corporate board seats for fear of liability. CEOs are finding it difficult to get good advice from lawyers and accountants for the same reason. Private companies are reconsidering plans to go public, and public companies are wondering whether access to capital markets is worth the steep price.

New rules go too far

Tell us what you think. (0) comments.
Send to a friend:   

Creating stakeholder value in the information age

Sarbanes-Oxley, risks, controls, compliance. These are some of the most common terms being used in many boardrooms these days. They join the old favourites of value and performance.

The landscape of corporate governance has changed immensely since the emergence of recent corporate failures and resulting legislation and regulations. The sheer volume of new requirements, coupled with responsibilities placed by legislation and stakeholders, is overwhelming C-level executives, board members and audit committees.

The simple message about information technology governance is that it needn't be complicated. After all, the IT department is no different than any other part of an organisation and should be governed with the same diligence and control focus that is exercised in other areas of the organisation, such as finance and human resources.

Unfortunately, many discussions about IT (and its governance) are often disjointed, laced with lingo, and muddled by unclear messages, which only serves to bewilder the very people who need to understand how to govern IT.

Creating stakeholder value in the information age

Tell us what you think. (0) comments.
Send to a friend:   

Wednesday, December 01, 2004

The Hard Knocks of Coping with SOX

You can bet that the chief financial officers at many small and midsize public companies breathed a sign of relief on Nov. 30. That's because the Securities & Exchange Commission announced a decision that day to grant outfits nearing the end of their fiscal years and with less than $700 million in market capitalization another 45 days to comply with tough new regulations contained in the Sarbanes-Oxley Act, known as SOX.

Even though Congress passed the corporate governance legislation all the way back in July, 2002, many public companies continue to struggle to comply with provisions detailed in Section 404 of SOX, which took effect on Nov. 15. That section requires management of public companies (and their external auditors) to sum up the quality of internal controls over financial reporting in the 2004 annual report. For most companies the report has to be lodged just 75 days after the end of their fiscal years. Now the estimated 2,000 outfits that qualify for the postponement will have an extra month-and-a-half to submit the 404-related filings.

The Hard Knocks of Coping with SOX

Tell us what you think. (0) comments.
Send to a friend:   

Sarbanes-Oxley is an IT Responsibility and Business Opportunity

Several months ago, you thought that Sarbanes-Oxley was something that CEOs and CFOs had to worry about to keep themselves from cooking the books and going to jail. Think again.

Today, you flunked your first audit associated with Sarbanes-Oxley. To add insult to injury, you now have a few months to rectify your deficiencies. With limited resources, you can't afford to spend additional cycles on compliance at the expense of day-to-day operations.

You're not alone. Many IT professionals are learning the hard way that Sarbanes-Oxley has as much to do with IT as it does with determining the quarterly profit margin. How did this newly minted legislation work its way from the confines of the boardroom into the trenches of the data center? Over the past year as companies scrambled to meet compliance deadlines, Sarbanes-Oxley has been an evolving and interpretive piece of legislation.

As companies prepare for compliance, procedures and policies associated with corporate reporting have been diligently defined and documented. As part of this process, an internal audit is conducted - either by an inside or outside entity - in order to assess compliance readiness and withstand future scrutiny from the federal government. At the start of the audit, core business processes that are fundamental to the financials of the company processes are identified. For example, business processes can include general ledger, accounts receivable and quote to cash reporting, among others. After all of the processes are identified, the audit team then delves deeper into the integrity of each of these processes.

Sarbanes-Oxley is an IT Responsibility and Business Opportunity

Tell us what you think. (0) comments.
Send to a friend:   

Regulators give little ground on Sarbanes-Oxley deadline

The US Securities and Exchange Commission (SEC) yesterday extended its internal control reporting deadline for some companies liable to comply with the Sarbanes-Oxley Act, giving them a little more time to get IT their systems in order.

Companies with a public float of at least $75m (£40m), known as 'accelerated filers', will now have an additional 45 days following the passing of the deadline of Section 404 of the Act, where directors and auditors have to certify the veracity of financial data used in the production of SEC filings.

The Section focuses on these 'internal control reports', where the production of financial data is heavily dependant on IT-based processes within various systems for accounting and sales, for example.

Regulators give little ground on Sarbanes-Oxley deadline

Tell us what you think. (0) comments.
Send to a friend:   

Rank could look at US delisting

Rank Group has signalled it would consider delisting from the US as result of the regulatory "burden" imposed by the Sarbanes-Oxley corporate governance legislation. The leisure company, which has interests ranging from casinos to the Hard Rock café chain, said Sarbanes-Oxley had imposed "onerous" demands for questionable benefit.

Peter Reynolds, head of investor relations at Rank, said the cost was difficult to isolate but "it has taken a lot of additional resources". He said that as the company complied fully with UK listing rules and regulations, these were costs incurred for the small percentage of investors who held its shares through American Depositary Receipts listed in the US.

"You have a situation where the majority of the shareholders subsidise the minority," he said. Mr Reynolds estimated that about 5 per cent or less of Rank's equity was held through ADRs.

The criticism from Rank adds to growing dissent among European companies over Sarbanes-Oxley. British and German business groups have launched a campaign to urge the Securities and Exchange Commission, the US regulator, to make it easier for companies to delist.

Rank could look at US delisting

Tell us what you think. (0) comments.
Send to a friend:   

Accounting changes present new hurdles

When Martha Carnes went to work in the public accounting industry in the 1980s, she had a front-row seat to natural gas pipeline deregulation. Today, as the newly named managing partner of PricewaterhouseCoopers' Houston office, she is front and center for a regulatory overhaul of even greater proportions: the Sarbanes-Oxley Act. Carnes spoke with Chronicle reporter Tom Fowler about how the accounting industry and its clients are dealing with the demands of these new regulations in a post-Arthur Andersen world.

Q: What are the biggest challenges Sarbanes-Oxley created for the accounting industry?

A: It starts with the regulation of the accounting industry that Sarbanes-Oxley requires. We used to be self-regulated, but we're now regulated by the Public Company Accounting Oversight Board. They've generated new rules for our business and have more to come. But at the end of the day it's Section 404 of Sarbanes-Oxley, the requirement that all companies must review their internal controls, that has everyone working very hard right now. All companies have to assess and document their internal systems of checks and balances, and accounting firms now have to audit those assessments. It's creating an enormous demand for accounting talent, both with our client companies and at accounting firms.

Accounting changes present new hurdles

Tell us what you think. (0) comments.
Send to a friend: