Friday, September 30, 2005

Surviving Sarbanes-Oxley Audits: Lessons Learned by Database DBAs

Publicly held companies are now required to track and accurately report financial information as defined by the Sarbanes-Oxley Act enacted in 2002. One purpose of Sarbanes-Oxley (SOX) legislation is to guarantee that such companies have secure systems for managing, reporting on, and auditing their financial transactions, which translates into having financial databases with secure access, sensible controls, and reasonable disaster recovery capability. Louis Columbus explains how SOX, particularly Section 404, affects databases in the enterprise resource planning arena.

Surviving Sarbanes-Oxley Audits: Lessons Learned by Database DBAs

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Thursday, September 29, 2005

Execs describe Sarbanes-Oxley compliance lessons learned

Executives who oversaw the first round of compliance with the Sarbanes-Oxley Act for their companies say they would have done things a bit differently in hindsight, including educating more workers about steps they needed to take, assigning dedicated staffers to assess and monitor critical controls, and automating a greater portion of repairs to IT controls deemed deficient.

"You want to start the process early, to educate as many people as possible," said Neil Frieser, vice president of internal controls at Viacom Inc. Frieser, a speaker at The Sarbanes-Oxley Conference & Exhibition, held here yesterday, said Viacom conducted a staggering 19,600 tests on 1,560 business controls and 540 IT controls last year to meet Section 404 of the law. The work covered 116 business processes and 75 IT applications throughout the media company, whose divisions include CBS, MTV and Nickelodeon.

Execs describe Sarbanes-Oxley compliance lessons learned

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800-CEO-READ Blog: Is Capitalism Basically an Immoral and Selfish System?

Playing by these “new” but morally bereft rules has cost billions of dollars for shareholders, lost jobs and retirement funds for employees, and lost commerce for the merchants and others who did business with the firms which have failed. But these criminals have done great damage to the most precious commodity of all – trust in the system. Investor confidence is a fragile commodity and must be carefully nurtured. Sarbanes-Oxley solutions and other earlier reforms and regulations are one reaction. But legal solutions will never address the core issue: the quality of the moral sense of the individual capitalist.

It is time to deliberately train business leaders to think in this way before their worldviews are “baked in”. The most important skills for our collective well-being are moral competencies—honesty, responsibility, compassion and forgiveness and an underlying worldview that guides these human actions. All cultures around the world agree that these are universal virtues – and we certainly believe that they can be taught to our young. But it takes more than a family to teach these beliefs – it takes a global village!

800-CEO-READ Blog: Is Capitalism Basically an Immoral and Selfish System?

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SAP Films Educational Movies About the Challenges of Sarbanes-Oxley

realtime's Risk Management Tool, APM, has been installed over 150 times to SAP customers and our bioLock is well established in the SAP world as the first SAP certified biometric identity management solution. These were enough reasons for SAP to approach realtime to include us in an educational movie about Sarbanes-Oxley. We facilitated an interview with Professor Paul Foote, (a Harvard educated Accounting Professor in California and Sarbanes-Oxley expert), that has built a biometric research center around the bioLock technology. SAP decided to make an additional movie about the bioLock technology to point out the powerful capabilities of biometrics, when it comes to complying with mandatory regulations. Both movies were shown on SAP TV worldwide. The second movie was filmed at the Brevard County Government and the Kennedy Space Center and included interviews with Pete Gunn, the Director of Safety and Security for the Florida Space Authority. We would like to invite you to share these movies with interested colleagues and business partners. Feel free to use these educational movies on your websites.

SAP Films Educational Movies About the Challenges of Sarbanes-Oxley (Windows Media)

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Tuesday, September 27, 2005

Nearly Half May Not Make Second Sarbanes-Oxley Deadline

"It's alarming that almost half of the companies in our survey anticipate they will fail to meet the message retention requirements set forth in the next year's SOX deadline, even with 10 months still remaining to get their systems in place," Francis Costello, chief technology officer at Akonix, said in a release Monday. "Many popular software applications aren't equipped with features for enforcing compliance, which leads some organizations to neglect or ignore their own policies."

Nearly Half May Not Make Second Sarbanes-Oxley Deadline

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Transitioning from Year-One Sarbanes-Oxley Compliance: The 'Project to Process' Approach to Sustainability and Cost-Effectiveness

You've heard it before – "long-term Sarbanes-Oxley sustainability" and "cost-effective compliance." But why should you care? What exactly do these buzzwords mean, and what specifically do you need to do about it? Attend an online seminar and hear Protiviti Sarbanes-Oxley compliance thought leader, James DeLoach, cut through these common marketing phrases and give you REAL WORLD advice on what you should do for ongoing Sarbanes-Oxley compliance. Stellent's Director of Compliance Applications will also provide valuable technical advice that can help support these efforts.

Transitioning from Year-One Sarbanes-Oxley Compliance: The 'Project to Process' Approach to Sustainability and Cost-Effectiveness

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Fat Pitch Financials: Small Business Given More Time for Sarbanes-Oxley

This decision could slightly impact some of the going private transactions that are currently in process and could slightly reduce the number of future going private transactions that are proposed. The delay may reduce the cost of compliance by lowering the immediate demand for compliance services. This is the second time that an extension has been approved for small business compliance. I believe that the first extension coincided with some of the canceled going private transactions that occurred earlier this year.

Fat Pitch Financials: Small Business Given More Time for Sarbanes-Oxley

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Former SEC chair gives tips for SOX survival

The Sarbanes-Oxley Act has raised the bar for how public companies are run. Recent court decisions have shown that directors of public companies can't simply claim ignorance when problems arise. The former non-employee directors of WorldCom recently reached a $60.8 million civil settlement in a class-action suit stemming from the company's huge fraud. Insurance covers much of the cost, but the directors must pay $24.8 million themselves.

Former SEC chair gives tips for SOX survival

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Monday, September 26, 2005

Gartner: The SEC Fine-Tunes Operation of the Sarbanes-Oxley Act

Newly appointed SEC Chairman Christopher Cox, commenting on the proposal to ease quarterly filing deadlines and the extended deadline for small companies, said "[These changes] in no way reflect any desire to back away from the requirements of the Sarbanes-Oxley Act." One commissioner echoed those sentiments, pointing out that the benefits of the financial reporting and disclosure laws far outweigh the burdens. Another commissioner said the changes were designed to ensure that meeting the deadlines did not result in poorer-quality filings. In extending the deadline for small businesses, the SEC highlighted the work of an advisory committee that had recommended the extension.

Gartner: The SEC Fine-Tunes Operation of the Sarbanes-Oxley Act

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Poll: Companies Unprepared For Next Sarbanes-Oxley Deadline

Nearly half of public companies that filed for extensions to meet Sarbanes-Oxley requirements are likely to miss the next deadline, according to a poll by Akonix Systems Inc. The poll, released Monday, found that 45 percent of public companies will not have archiving systems in place for their e-mail and instant messaging by July 15, 2006. Executives can face fines and jail time for failing to meet the deadlines.

Poll: Companies Unprepared For Next Sarbanes-Oxley Deadline

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Sunday, September 25, 2005

Does punishment fit the crime? Some say no

The investing public, disgusted by the conduct of executives they trusted and still smarting from the market crash of 2000 to 2002, cheers the tough sentences, which are far harsher than those handed out to white-collar criminals in decades past. But some legal experts are starting to question whether the punishments fit the crimes.

These experts say they fear that public outrage, not rational legal thought, is what's driving prosecutors to seek long sentences and judges to hand them out. They point out that some corporate criminals have received more prison time than people convicted of violent crimes like assault, rape and manslaughter.

Does punishment fit the crime? Some say no

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Saturday, September 24, 2005

T-shirt: Control(s) Freak

Are you a Sarbanes-Oxley Controls Freak? Get your freak on and show your love for Sarbox with this stylish Sarbanes-Oxley t-shirt.

T-shirt: Control(s) Freak

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Good Intentions Don't Enforce Sarbanes-Oxley Mandates

More and more companies are overwhelmed by the enormity of the task of end-to-end compliance with Sarbanes-Oxley mandates, not to mention the frustration and confusion. Corporate executives and their front line managers are required to track a transaction at any given point in its life cycle, as well as report at any time whether controls are being followed. Errant transactions - either through errors or a deliberate act of fraud - that are not caught quickly can soon begin to erode the entire management control structure.

For many global companies, T-Recs Enterprise is already a critical component of their effective SOX compliance strategy. T-Recs provides complete automated control of the reconciliation and verification process, with instant access to transaction information as well as a permanent audit trail - reducing manual processes and mitigating risk.

Good Intentions Don't Enforce Sarbanes-Oxley Mandates

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Zero Day: Sarbanes Oxley Overview

Watched a good presentation of SOX this morning put on by Guidance Software, makers of EnCase forensics and incident response software. The overview, titled "True Sarbanes Oxley Compliance: How to Help Avoid Disastrous SEC Enforcement Actions and Fines" was presented by John Patzakis, a lawyer and Vice Chairman at Guidance. It ran about 40 minutes and was concise and to the point. If you're interested in Sections 404, 802, 302 and 409, or if you'd like a solid overview of SOX in general I'd recommend watching it.

Zero Day: Sarbanes Oxley Overview

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Thursday, September 22, 2005

XBRL Explained

In the first part of a series on XBRL, Rob Blake, Vice President of Product Marketing for Rivet Software, examines the history and development of XBRL, while highlighting the need for XBRL compliant technologies to ease the burden of government mandated regulations around financial reporting.

Post-Enron, post-WorldCom and post-Parmalat, it’s no wonder legislature such as Sarbanes-Oxley mandates increased accountability and controls for corporate America. Regulators now require more information than ever before in a more timely manner, and investors demand more clarity and transparency. Although great in theory and intention, the multi-billion dollar price tag that accompanies the tackling of these issues has placed significant strain on corporate budgets.

In addition to the time, work and money corporate governance requires, the possibility of error raises other issues, as mistakes can lead to not only costly fines but also to jail time for financial officers. Given this combination of costly challenges, technology innovators have introduced new standards and solutions to help corporations meet the challenges of financial reporting both quickly and efficiently.

XBRL Explained

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Optimizing the Role of Internal Audit in the Sarbanes-Oxley Era

Over the past year, Sarbanes-Oxley compliance has commanded a great deal of attention from internal audit departments, a situation which may have diverted resources from other duties. Over the long term, however, this deployment may be unsustainable. Entering year two, companies should strive to rebalance their internal audit activities. Those that do so stand to gain value in the market.

To help organizations fully realize the benefits of a high-performing internal audit function, Deloitte & Touche LLP has released a new publication, Optimizing the Role of Internal Audit in the Sarbanes-Oxley Era.

Optimizing the Role of Internal Audit in the Sarbanes-Oxley Era

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Internal Audit Functions may Need Rebalancing If Companies Are to Achieve Added Value, Says Deloitte & Touche

New Deloitte & Touche Report Illustrates Sarbanes-Oxley's Impact on Internal Audit Role & Responsibilities and Outlines Suggested Actions to Yield Added Value. Internal audit answered corporate America's call for help like no other business function during the first year of compliance with the Sarbanes-Oxley Act. If not for the function's involvement in business process analysis, control testing, risk management, and forensic accounting, the business landscape would likely be littered with significantly more disclosures of material weaknesses and revelations of noncompliance with the law.

Internal Audit Functions may Need Rebalancing If Companies Are to Achieve Added Value, Says Deloitte & Touche

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SEC Votes to Propose Changes in Filing Deadlines and Accelerated Filer Definition

Today the Securities and Exchange Commission voted to propose for comment amendments to filing deadlines for periodic reports required by rules under the Securities Exchange Act of 1934 and changes in accelerated filer definitions; decided to postpone for an additional year the compliance date for filing internal control reports by companies not designated as accelerated filers; and voted to publish for comment proposed interpretive guidance concerning Section 28(e) of the Securities Exchange Act of 1934.

SEC Votes to Propose Changes in Filing Deadlines and Accelerated Filer Definition

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Wednesday, September 21, 2005

The Strategic Advantage of a Holistic Approach to Enterprise Governance

Executives attempting to juggle risk management, security, privacy and several levels of compliance while staying competitive are also faced with managing business and IT governance issues. One approach that can help in keeping all those balls in the air is to examine those areas where IT governance, business governance and business process management intersect. This examination can lead to better decision-making in efforts to automate processes in IT and business governance, compliance and business processes generally.

Date: Wednesday, October 19, 2005
Time: 11:00 AM PT / 1:00 PM CT / 2:00 PM ET
Duration: 60 minutes

The Strategic Advantage of a Holistic Approach to Enterprise Governance

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CIOs Say Customer Data-Sharing Is Ongoing Struggle

CIOs are still struggling with ways to comply with regulatory issues and share customer data among business units within their organizations. At the InformationWeek Fall Conference on Tuesday, it was a topic for a panel discussion between IT executives at synthetic fiber company Unifi, sales and marketing services firm Maritz, and trucking company Crete Carrier.
The three aren't small businesses. Maritz, a global company, garners $1.5 billion in revenue annually, supported by about 4,000 employees. Still, until recently its business units operated in silos. Employees talked a lot but didn't share the data. "Our value is providing customers with data they can't get through their own IT organization," says Gill Hoffman, senior VP and CIO at Maritz, which collects customer-satisfaction data for large auto manufacturers. "It became clear the information couldn't remain in silos if it was to benefit the customer."

Complicating projects are regulatory-compliance issues such as the Sarbanes-Oxley Act. Maritz ran into some interesting challenges as it recently embarked on sharing data between business units because it brings in departments that hadn't previously worked with specific customers.

CIOs Say Customer Data-Sharing Is Ongoing Struggle

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CFO: SEC Delays Small-Company 404 Compliance

As expected, the Securities and Exchange Commission has granted small companies another year—until July 2007—before they must report on their internal controls under Section 404 of the Sarbanes-Oxley Act, according to the Associated Press.

That is the second time the SEC has given small companies an extra year before complying with the provision, which states that companies and their auditors sign off on corporate compliance with the internal controls provision of the act. The commission voted 5-0 for the extension at a public meeting, signaling its sensitivity to small-company complaint about the financial and logistical burden of complying with the new rules.

CFO: SEC Delays Small-Company 404 Compliance

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Tuesday, September 20, 2005

US SEC to consider easing new rules for small cos

The U.S. Securities and Exchange Commission is poised to ease regulations on Wednesday for small and mid-sized companies in two areas -- internal financial controls and accelerated report filing.
The SEC is also expected to give more public guidance on "soft-dollar" deals in which mutual fund managers get free research and other services from brokerages in exchange for sending buy and sell orders for securities to the brokerages.

The SEC said it will consider these measures in a public meeting -- the first for recently named SEC Chairman Christopher Cox. The former congressman was named this summer by the White House to head up the investor protection agency.

Two of the measures to come before the SEC at the meeting will culminate months of complaints by businesses, large and small, about the burdens of two controversial rules.

One rule requires U.S.-listed corporations to explain their internal financial controls publicly every year, and to get their outside auditors to comment as well. The rule is part of Section 404 of 2002's post-Enron Sarbanes-Oxley reforms.

US SEC to consider easing new rules for small cos

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Security Compliance An Issue For Government And Businesses

Compliance with the Federal Information Security Management Act, or FISMA, is one of the most daunting challenges that government chief information security officers face this year. Part of the 2002 E-Government Act, FISMA requires each federal agency to develop, document, and implement comprehensive information-security policies and practices to deal with security threats that concern government entities and businesses alike.

Knowing that federal IT security managers are devoting an increasing amount of time and resources to comply with FISMA, systems and security management vendor NetIQ Corp. on Monday introduced FISMA-specific templates for its Security Compliance software suite. The four templates tackle access control, audit and accountability, configuration management, and identification and authentication, automating the IT security-auditing process for federal agencies now required to submit security-related systems assessments annually to the White House's Office of Management and Budget. The templates produce reports for security managers that indicate their IT systems' level of compliance and ways in which they can improve their compliance scores.

NetIQ based the templates upon the National Institute of Standards and Technology's, or NIST's, SP800-53 guidelines. Finalized in February, SP800-53 outlines the management, operational, and technical safeguards necessary to comply with FISMA. These policy templates expand NetIQ's library of existing policy templates, which already cover the Sarbanes-Oxley Act, Gramm-Leach-Bliley Act, Health Insurance Portability and Accountability Act, ISO1779, and Center for Internet Security benchmarks.

Security Compliance An Issue For Government And Businesses

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Jubak's Journal - Has Congress sparked a banking crunch?

Remember Sarbanes-Oxley? The act Congress passed in 2002 was intended to prevent accounting fraud like that perpetrated by Enron and WorldCom. In the banking sector, though, the law designed to ensure that companies report numbers that accurately reflect their financial conditions is instead forcing banks to paper over problems they know are coming.

The unintended consequence of post-Enron accounting reform could be a meltdown in the U.S. banking sector.

How do I know? Bankers themselves (and several accountants doing work for banks) have told me so in e-mail responses to my Sept. 9 column, "Do-nothing Fed is dangerously disengaged."


Jubak's Journal - Has Congress sparked a banking crunch?

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Fujitsu leading XBRL vendor

CityCompass Research, the specialist independent research company in the European financial services sector, today announced that Fujitsu is the leading XBRL (eXtensible Business Reporting Language) vendor, as judged by leading XRBL experts in the financial industry’s first XBRL benchmarking tests.

The B.I.S.S benchmarking evaluates technologies against the business objectives of financial firms, rather than focusing purely on a product’s technology capabilities. Therefore, the XBRL benchmark tests provide banks, and other financial institutions, with a valuable yardstick to match their own needs for electronic reporting against vendor offerings.

With the financial industry undergoing unprecedented change, driven by MiFID (The Directive on Markets in Financial Institutions) and Sarbanes Oxley legislations, XBRL is fast becoming the industry standard to enable financial institutions to meet and manage compulsory reporting requirements.

"The benchmarking illustrated that Fujitsu is the clear market leader in XBRL, with product superiority, coupled with a deep appreciation of the business values of XBRL," he continued. "I congratulate them on achieving the Gold B.I.S.S Award and can with confidence recommend them to the European financial market."

Fujitsu leading XBRL vendor

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Monday, September 19, 2005

Financial Rounds: The Unexpected Costs of Sarbanes-Oxley

It's been a while since I beat up on Sarbanes Oxley, and it's a slow Friday. So, here we go again. Grant Thornton recently mailed out questionnaires to CFOs, treasurers, and controllers. Based on the 101 responses they received: sixty-five percent of senior financial executives of public companies surveyed say it’s more difficult today to recruit corporate directors because of the three-year-old federal Sarbanes-Oxley corporate-disclosure law and concerns about higher director liability

Financial Rounds: The Unexpected Costs of Sarbanes-Oxley

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Two former Tyco execs sentenced to up to 25 years in prison

During his time at the helm of Tyco, L. Dennis Kozlowski once earned $267 million over a three-year period. He stayed at a lavish Fifth Avenue apartment with million-dollar paintings on the walls. He sailed around the world in a 130-foot yacht.

But on Monday, Kozlowski was led out of a courtroom in handcuffs to begin a lengthy sentence at an austere New York state prison for stealing hundreds of millions of dollars from Tyco to fund his extravagant lifestyle. The judge sentenced Kozlowski, 58, to eight and one-third years to 25 years behind bars; he will be eligible for parole after about eight years.

Tyco's former finance chief Mark Swartz, 44, received the same sentence, and state Supreme Court Justice Michael Obus ordered the defendants to pay a total of $134 million in restitution to Tyco. In addition, the judge fined Kozlowski $70 million, and Swartz $35 million.

Two former Tyco execs sentenced to up to 25 years in prison

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Hewlett-Packard to buy Peregrine for $425M in cash

Peregrine, which emerged from bankruptcy more than two years ago, has shed many employees, dropping its payroll from about 3,000 to 700, and has sold some of its acquisitions to raise cash. But the Carmel Valley-based company kept going with its core product line of highly regarded business management software.

John Mutch, Peregrine's chief executive officer, has led a "very high-quality team that has done a very nice job of cleaning up," DeLaughter said. "It's an amazing turnaround for the company."

Peregrine's software tracks a company's information technology, or IT, assets, enabling them to determine if they are being efficiently used.

"It's the key to the IT safe for a CIO (chief information officer)", DeLaughter said. The Sarbanes-Oxley Act, which places more responsibility on executives to vouch for a company's financial statements, makes such tracking software more valuable, he said.

Hewlett-Packard to buy Peregrine for $425M in cash

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Investors to Increase Technology Investments in 2005

In terms of the general marketplace, investors surveyed expressed more confidence about foreign markets than the U.S. market. More than 75 percent of respondents believe the U.S. market will be moderate-to-weak from an investment perspective over the next 12 to 18 months, while 48 percent believe that international markets will be good-to-exceptional during the same timeframe.

An increasingly demanding regulatory environment appears to be partially responsible for perceived weaknesses in U.S. markets, according to survey respondents. Fifty-three percent believe increased regulation, such as Sarbanes-Oxley, will have a significant-to-severe impact on the U.S. market over the next 18 months. Only five percent believe increased regulation will have no impact on the U.S. market.

Investors to Increase Technology Investments in 2005

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Sunday, September 18, 2005

The Business Controls Caddy: Does Your Organization Ignore Lotus Notes As a Process Management Tool

Submitted for your approval. The auditors have finished their Sarbanes-Oxley Section 404 audit of controls. Your organization has been cited for not having an approval process for changes to your PeopleSoft HR Financial Systems. They tell you that you have to have management sign-off on all changes before they go into production (especially since the application developers are allowed direct access to the production system). Does the manager of this organization choose to leverage the organization's investment in Lotus Notes/Domino to automate the processing and storage of configuration change aproval requests? No, that would make too much sense. Welcome to the Twilight Zone of a very real story from the front-lines of Sarbanes-Oxley audits, and questionable management responses.

The Business Controls Caddy: Does Your Organization Ignore Lotus Notes As a Process Management Tool

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Software firms in the grip of merger mania

Some analysts said stricter accounting and corporate governance rules defined by the Sarbanes-Oxley Act are providing an added boost to smaller companies to merge with bigger players.

That's because "Sarbanes-Oxley has raised the cost of doing business at a disproportional rate for smaller companies," Shaw of Moors & Cabot said.

Peterson of Thomson Financial said there's also more pressure on directors of public companies "to act in the best interest of shareholders," so they "can't afford to be dismissive" of merger proposals from bigger players.

The merger mania is bound to continue over the coming months into next year, analysts say.

Software firms in the grip of merger mania

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Friday, September 16, 2005

fishsupreme: The Joy of Regulation

One thing my job entails is looking at government and administrative regulations that make requirements on businesses (particularly the business I work for.) For me, this is primarily the Payment Card Industry Data Security Standard, which isn't a government regulation at all but rather a regulation Visa and MasterCard are imposing on any firm that accepts them in large numbers.

However, this results in me keeping up with the news on other regulatory compliance issues, too, since I regularly talk to external auditors. And let's just say that this has not increased my faith in the government to create useful regulations (not that I had any to begin with.)

Sarbanes-Oxley was a massive law passed to prevent corporate accounting fraud of the kind that brought down Enron, WorldCom, and Tyco. In addition to the much-talked-about accountability requirements (CEOs being personally responsible for the validity of the company's financial statements), it included rigid accounting requirements on practically everything.

fishsupreme: The Joy of Regulation

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Gartner: Contracting for Sarbanes-Oxley Compliance in Your Outsourced Processes or Functions

Public companies' outsourced processes or functions must comply with Sarbanes-Oxley regulations. Before entering into an outsourcing contract, however, companies must decide when and how Sarbanes-Oxley applies.

Gartner: Contracting for Sarbanes-Oxley Compliance in Your Outsourced Processes or Functions

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Thursday, September 15, 2005

LawInfo Blog: SEC expected to ease anti-fraud law

The Securities and Exchange Commission announced Wednesday it will vote next week on giving smaller companies, some of whom had complained about the burden of complying, a second extra year _ until July 2007 - to meet the requirement to file reports on the strength of their internal financial controls under the Sarbanes-Oxley Act of 2002. The five-member commission is widely expected to adopt the change at its public meeting scheduled for next Wednesday.

LawInfo Blog: SEC expected to ease anti-fraud law

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SOX Compliance - Cutting Through the Static

The Sarbanes-Oxley deadline is finally upon us—and public companies with early fiscal year-ends are feeling the heat. Over the past 3 years, endless headlines have preached about the consequences of not abiding by the Act.

A bit of additional education never hurts. This is not intended as the end-all column on compliance, but rather a piece to examine some of the top SOX storage considerations at a high level. Remember that the best compliance strategy begins with thoroughly studying the Sarbanes-Oxley Act, as well as any other regulations affecting your industry.

The SEC added stringent amendments for financial reporting to the Sarbanes-Oxley Act, spurred by the rash of corporate scandals that rocked the Enron era. New provisions call for more comprehensive auditing systems to ensure accuracy within financial reports. For example, companies must now include a management report covering the internal control structure in their annual findings.

Storage strategies come into play because many of the auditing requirements ride on data integrity. The Act makes it illegal for “any person to alter, destroy, mutilate, or conceal any document with the intent to impair the object’s integrity or availability for use in an official proceeding…” In other words, companies must ensure that their data has not been tampered with or altered. Write Once Read Many (WORM) storage technologies (whether in the form of disk, tape or optical) are a natural choice for storage regulated data.

SOX Compliance - Cutting Through the Static

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Lab49 Blog: Agile Development and Operational Risk Management

Christian hit on some key points to be sure, focusing mostly on the fact that it’s cheaper to fix problems right when they’re caught. However, another important point to consider would be Operational Risk Management.

Increasingly, banks are called upon to manage and report on all forms of risk - market risk (credit risk, interest rate risk, FX risk, etc) as well as operational risk (security, disaster recovery, etc.) See for instance the Basel II regulations and Sarbanes-Oxley.

Lab49 Blog: Agile Development and Operational Risk Management

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Hyperion Reports Sarbanes-Oxley Compliance Fueling Improvements in Business Performance

Hyperion (NASDAQ: HYSL), the global leader in Business Performance Management (BPM) software, said today that a July 2005 special study from IDC, The Compliance Chasm, confirmed that in complying with Sarbanes-Oxley mandates companies are also gaining greater insight into their financial performance.

The report, based on a survey of 220 business leaders about the cost and effectiveness of Sarbanes-Oxley compliance, follows the first full year of compliance initiatives.

Respondents to the IDC survey indicated that they were not only anticipating improvements in financial management activities but overall business performance management as well. A whopping 88% of respondents said that Sarbanes-Oxley would have a positive impact on business performance. As a result, IDC reports, a number of organizations have now moved from viewing compliance as a burden to using compliance requirements as an opportunity to improve business processes and manage risk.

Hyperion delivers targeted compliance solutions to meet the growing needs highlighted in the IDC study. The combination of Hyperion Financial Management software, which delivers collection, financial consolidation, reporting and analysis, and Hyperion Compliance Management Dashboard software, which integrates ongoing compliance controls with financial reporting and analysis, provide a high degree of automation and integration of processes, systems and data.

Hyperion Reports Sarbanes-Oxley Compliance Fueling Improvements in Business Performance

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The Sarbanes-Oxley Act of 2002 and its Impact on IT Security

In order to comply with the Sarbanes-Oxley Act of 2002, the chief executive officer (CEO) and the chief financial officer (CFO) of all publicly traded companies registered with the U.S. Securities and Exchange Commission (SEC) must attest to their companies' "internal controls" and personally validate the accuracy of its financial records. If the CEO or CFO is aware of any reason why the financial data may not be 100% correct and chooses not to disclose that information, then he/she may be convicted of regulatory wrong-doing and subject to penalties including personal fines and prison time. Since the possible penalties personally affect the CEO and CFO, there is added incentive for them to be highly attentive to corporate audits designed to ensure financial accuracy.

Since IT systems are used to generate, change, house, and transport financial data, corporations have to build the controls that ensure the information stands up to audit scrutiny. To do this IT departments have to establish security infrastructures that ensure the security of financial data and applications while providing detailed reporting for auditors.

This paper will focus on the sections of Sarbanes-Oxley that relate to system security and the role Apani Networks plays in ensuring that key systems that house financial data are in full compliance with Sarbanes-Oxley regulatory requirements.

The Sarbanes-Oxley Act of 2002 and its Impact on IT Security

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Wednesday, September 14, 2005

Make Your Small Cap SOXable

As the importance of compliance grows in upper tier markets, the importance of compliance proliferates exponentially through Tier II and over-the-counter markets. While companies traded in upper tier markets tend to have the resources to comply with requirements (such as those in the Sarbanes-Oxley Act), small caps need to invest their resources in growth initiatives more than complex compliance initiatives. They need to invest their funds more judiciously, which makes innovative approaches to compliance crucial. The clock is ticking for all 3,319 companies that trade on the OTCBB and all 10KSB filers. There were 3,560 10KSB filers, meaning that a few hundred of them either trade via a lower level listing program or the pink sheets. The result is that 3,560 publicly traded small and medium-sized enterprises (SME) that currently face compliance challenges, and twice as many may need to prepare for near-term compliance.

You may not have to comply with Sarbanes-Oxley yet, but it is on the horizon. There are many reasons why Sarbanes-Oxley could be in your future. If your company is publicly traded already, then you have to comply (if your market capitalization is over $75 million). Companies considering an IPO need to consider Sarbanes-Oxley as well – prior to issuing. OTCBB companies that want to graduate to a Tier II exchange, such as NASDAQ Small Cap and AMEX, also need to comply with Sarbanes-Oxley as a prerequisite to listing. If you are private and considering going public, you have to consider Sarbanes-Oxley. As you have heard, complying with Sarbanes-Oxley is difficult, complex, and time-consuming.

Make Your Small Cap SOXable

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Lincoln Logs not required to post SEC filings under new status

The Chestertown maker of log home kits first announced its plan in April. Through the reverse split, which took effect Sept. 13, Lincoln Logs whittled its shareholders list from more than 3,000 people to about 130. Anyone with fewer than 500 shares before the split received cash in exchange for their holdings.

This allowed Lincoln Logs to "de-register" its stock. Under U.S. Securities and Exchange Commission rules, companies with fewer than 300 shareholders are not required to make public filings.

Benjamin Shephard, chief financial officer of Lincoln Logs, said this should save the company about $300,000 a year. The public filing requirements have become particularly onerous since the passage of the Sarbanes Oxley Act of 2002.

Lincoln Logs not required to post SEC filings under new status

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Security Market Wrap: Security dominates SOX product spend

NetworkWorlds' latest Executive Guide to compliance had the following interesting information. US companies will spend $15.5Bn on compliance activities thsi year according to latest findings from AMR research. Sarbanes Oxley (SOX) will take $6.6Bn of this. IT Security technology grabs the lions share of technology spend on SOX, at 26%.

Security Market Wrap: Security dominates SOX product spend

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Tuesday, September 13, 2005

What Does Sarbanes-Oxley Mean for Companies That Want to Go Public?

Conventional wisdom has it that Sarbanes-Oxley is preventing companies from going public. While that hasn't been proved--Nasdaq will have more IPOs this year than last year if the trend holds--the regulations have clearly made it more expensive to go public and stay public.

Because public companies need to comply with Sarbanes-Oxley, including the costly rules on internal controls, a company planning an IPO needs to have a cash hoard set aside in advance. It will face higher audit costs, higher insurance costs, and more regulatory-related duties for its staffers.

The added costs of Sarbanes-Oxley are one reason, among many, that IPO-ready companies are now larger and more established than they used to be. Jim McGeaver, chief financial officer of business software company NetSuite, which is based in San Mateo, Calif., notes that 10 years ago when he worked at Photon Dynamics, that company had no trouble going public with $20 million in revenue. "Now that has to be in the $50 million to $75 million range for the investment bankers to even look at you," McGeaver says. "It is just going to mean that companies will go public later in the cycles."

What Does Sarbanes-Oxley Mean for Companies That Want to Go Public?

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SEC delays Sarbanes-Oxley for small firms

The Securities and Exchange Commission is expected to give small companies another year to comply with a Sarbanes-Oxley rule intended to improve financial reporting controls, the Wall Street Journal said on Tuesday.

Citing people familiar with the matter, the newspaper said the SEC, which in March agreed to a one-year delay for small businesses, plans to grant another year-long reprieve later this month.

The relief would give companies with a market capitalization of up to $75 million until July 2007 to comply with the rule, the report said. An SEC spokesman declined to comment.

SEC delays Sarbanes-Oxley for small firms

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Monday, September 12, 2005

Could compliance nix VOIP?

So, and back to VOIP, will VOIP sessions have to be stored also for compliance and legal discovery purposes? Do regimes such as Sarbox and Basel II mean that VOIP-based business communications have to be stored? And, and this is a really big 'and', does it mean that they have to be indexed?

If it means they have to be recorded then is this a big problem? I think it can be. Five hundred spoken VOIP words will take up more storage space than 500 e-mail words. A VOIP session may involve more than 500 words. There will be two or more speakers.

A VOIP instant message will (will it?) mean more storage space than the equivalent word count AOL Instant message. A VOIP-based video will involve a lot more storage and there may be many people taking part.

The cost of VOIP needs to encompass the compliance and discovery-related storage costs of keeping VOIP messages. The more messages here are and the more rich these messages are, from the spoken word to video, the more impact this will have. So much so that a large VOIP project could possibly return negative ROI because of the ancillary storage costs.

Could compliance nix VOIP?

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PWC brings in regulatory harvest

Accounting giant Price Waterhouse Coopers made an extra £100m in the UK last year as new accounting standards and Sarbanes-Oxley corporate governance rules increased the regulatory burden on companies.

The additional revenue accounted for the bulk of the increase in turnover from the firm's audit practice, which rose from £732m to £861m. Including its tax and advisory businesses, PWC's UK revenues rose 18pc to £1.78billion last year, with profits £64m higher at £469m.

Between them, Sarbanes-Oxley and international financial reporting standards (IFRS) had the effect of raising FTSE 100 audit fees by 22pc to a record £321m last year, according a survey released yesterday by Accountancy magazine. PWC audits 42 of the FTSE 100 companies.

Chris Quick, editor of Accountancy, said: "FTSE 100 companies have been hit by a triple audit whammy this year. First there are the complications of introducing IFRS. Secondly, many have been hit by the US Sarbanes-Oxley rules.

PWC brings in regulatory harvest

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Sarbox: Setting a Better Organization in Motion

In his first law of motion, Sir Isaac Newton stated that, "Every object in a state of uniform motion tends to remain in that state of motion unless an external force is applied to it."

While this law was intended to explain actions in the physical universe, it could easily apply to the corporate universe as well — particularly when it comes to Sarbanes-Oxley (a.k.a. SOX or Sarbox). This legislation, which recently went into effect for most organizations, is intended to increase confidence and assurance regarding the operations of large, public companies. Although Sarbox is broad and implementation-agnostic, many of the strategies that will meet its requirements can be drawn from best practices that will also improve the overall operations of the organization.

Yet like the proverbial Newtonian object flying through space, many of these same organizations would, given a choice, allow momentum to dictate their direction rather than expend the energy necessary to change course — even if on a collision course with a much larger object. As a result, many organizations are doing the minimum required for Sarbox compliance. They're creating additional layers of bureaucracy and approvals “for audit purposes.” The results are entirely predictable: increased costs, more inefficiencies and frustrated employees. These haphazard, reactionary compliance strategies not only cause stress, they may cause the organization to miss a tremendous growth opportunity that could create a real competitive advantage.

Sarbox: Setting a Better Organization in Motion

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Sunday, September 11, 2005

: Service-Oriented Architecture

This is one of the key things CEOs are concerned about today - how many spreadsheets did it take to produce the financial data they are being asked to sign off on? Ideally the answer is none. While regulations like Sarbanes-Oxley have forced the issue, software as a service models also demand more timely and detailed financial data."

You can read on to learn more about the "financial instructure" solution he is proposing (One his company, unsurprisingly, can help you create). The new systems should "accurately capture, track, and forecast totally new revenue streams."