Monday, October 31, 2005

Turning Sarbanes-Oxley into a strategic Advantage

Sarbanes-Oxley compliance has forced and is continuing to force companies to reengineer their business processes, which can improve overall enterprise risk management and business performance and therefore create enormous productivity gains. Complying with Sarbanes-Oxley mandates can be costly and time-consuming. Global companies have estimated that it will cost between $10-$20 million to implement the appropriate control frameworks (COSO, CoBiT) and create the environment needed to fulfill Sarbanes-Oxley requirements on an annual basis. Yet, for those companies determined to turn the business knowledge gleaned from Sarbanes-Oxley into a competitive advantage, an important silver lining beckons. The information that companies gather while complying with Sarbanes-Oxley, in particular regarding internal controls and risk management processes, can open up new opportunities to streamline businesses and increase profit. Here are ten tips to getting the most out of your company’s Compliance Strategies and benefiting from the silver lining.

Turning Sarbanes-Oxley into a strategic Advantage

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Sunday, October 30, 2005

For some firms, regulators' fraud 'cure' is bitter pill

Smaller public companies may be in for a regulatory break. A Securities and Exchange Commission (SEC) advisory panel is expected to recommend as early as December a significant streamlining of the Sarbanes-Oxley auditing and compliance requirements to minimize redundancy and what many financial officers say is an unfair cost burden on small public companies.

"Sarbanes-Oxley costs us $2 million annually, and we can't see the benefit," said Tony Brausen, chief financial officer of Tennant Co. "It was passed in haste [by Congress in 2002] in the wake of the Enron and WorldCom scandals. It doesn't do what those legislators wanted it to do."

Brausen's boss, CEO Janet Dolan, is one of two Minnesota executives on the 21-member panel meeting this week in Washington. And Dolan, a former Tennant general counsel, and other Sarbanes critics are focusing most of their concerns on the internal control audit requirements known as Section 404.

For some firms, regulators' fraud 'cure' is bitter pill

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Saturday, October 29, 2005

Snowe Concerned Sarbanes Oxley Could Impede Small Business Job Growth and Competitiveness

In a letter to Securities and Exchange Commission Chairman Christopher Cox, U.S. Sen. Olympia J. Snowe (R-Maine), chair of the Senate Committee on Small Business and Entrepreneurship, today expressed strong concern that the Sarbanes-Oxley Act of 2002 will create unintended burdens on small businesses that will hurt job creation, competitiveness, access to capital, and their ability to continue as publicly traded companies.

Last year Senator Snowe and Senator Michael Enzi asked the Government Accountability Office to study the Act's effects on small businesses, and to determine if the Act places a disproportionate compliance burden on small businesses. This important study will be available by year end.

Sen. Snowe wrote:

"In 2002 Congress enacted the Sarbanes Oxley-Act, which I supported, in response to abusive corporate accounting practices . . .

"While the Act has improved publicly traded companies' corporate governance, I believe strongly that it is necessary to consider whether the Act is creating unintended burdens on small businesses. For example, there is evidence that Section 404 of the Act imposes dis-proportionately high compliance costs on small companies in comparison to large companies. These high costs can eliminate small businesses' profitability and threaten their survival. I am particularly concerned that some of the Act's provisions are diverting many small business owners' focus, and limited resources, away from innovation and growth opportunities and towards a concentration on documenting accounting measures and internal controls. While compliance and controls are needed, the SEC must strike an appropriate balance for small companies . . ."

Snowe Concerned Sarbanes Oxley Could Impede Small Business Job Growth and Competitiveness

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Friday, October 28, 2005

Oil-for-food scandal shows pressure U.S. companies face when they work overseas

Bribery is more dangerous than it used to be. Since 1977, the Foreign Corrupt Practices Act has barred U.S. companies from bribing overseas government officials. In 1997 European countries followed suit with their own anti-bribery protocols, which the U.S. also signed. And in the United States, the 2002 Sarbanes-Oxley law made executives liable for fraud at their companies, raising the stakes further.

Wrage said she used to hear from some businesspeople, "'Isn't bribery just a victimless crime?' I don't hear that anymore. It's just become too expensive now," especially for U.S. companies.

"There was a time not that many years ago where it was like the Wild West out there - companies would do what they thought they had to do to win business, regardless of ethics," Hershman said.

Several experts said European enforcement has been lax, though. Wrage said there have been prosecutions in only 11 countries, and many of them have targeted American companies instead of companies based in their own countries, she said.

Oil-for-food scandal shows pressure U.S. companies face when they work overseas: "Sarbanes"

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US SEC panel has Sarbanes-Oxley 404 in its sights

Members of a U.S. Securities and Exchange Commission advisory panel harshly criticized tough Sarbanes-Oxley accounting requirements on Monday ahead of its expected early 2006 recommendations to minimize compliance costs on small companies.

The SEC Advisory Committee on Smaller Public Companies reserved their harshest words for the internal control audit requirements of 2002's Sarbanes-Oxley Act known as Section 404.

Some panel members derided the 404 requirements not only for high costs, but also for being unimportant to investors. No panel member defended the requirements during the morning session of the public meeting.

US SEC panel has Sarbanes-Oxley 404 in its sights

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Thursday, October 27, 2005

Insider View: The Sarbanes-Oxley Conference and Exposition

As panelists, we represented different perspectives on the types of technology and services required to support Sarbanes-Oxley compliance. As you know, demonstrating SOX compliance has proven to be a time-consuming, labor-intensive process and it’s not one that’s going away. There’s virtually universal agreement that there is no “silver bullet” for achieving sustainable regulatory compliance. The conference panel discussion highlighted some of the technologies and approaches necessary to create an enterprise compliance framework that can enable companies to plan, implement, manage, and maintain ongoing testing and monitoring of the effectiveness of the internal controls related to financial reporting in support of SOX 404 compliance.

Audit tools and financial transaction monitoring capabilities – security and infrastructure controls, and process and documentation controls solutions – all play an important role in achieving compliance. These solutions can feed SOX compliance management, business intelligence, or business/corporate performance management solutions to provide greater and timely visibility and assurance of the controls health of the organization.

Insider View: The Sarbanes-Oxley Conference and Exposition

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MailFrontier Enables Compliance without Complexity for Business Enterprise

Regulatory compliance and corporate governance are driving additional requirements for businesses of all sizes. Whether externally required such as HIPAA, GLBA, or SOX, or internally mandated protections on intellectual property, limitations on offensive language, or other policies, IT needs tools to create policies and enforce policies. MailFrontier enables businesses to establish compliance policies and provides the power to easily enforce these policies across the organization or to specific groups.

MailFrontier Enables Compliance without Complexity for Business Enterprise

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SEC examines Sarbox for small business

In an effort to help smaller businesses implement the internal control requirements of the Sarbanes Oxley Act, the SEC has issued guidance to aid small businesses in understanding the regulations. The guidelines, issued by Committee of Sponsoring Organizations of the Treadway Commission (COSO), were welcomed by SEC chief accountant Donald Nicolaisen as 'an important step forward in helping smaller businesses understand and apply COSO’s internal control framework in connection with implementing Section 404 of the Sarbanes-Oxley Act'.

SEC examines Sarbox for small business

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Five compliance questions to ask your CEO

SOX is still here, but this year you're smarter. If you survived year one, then you know a lot more now. But do your CEO and executive board know enough? If they still need a SOX tutorial, then you are in luck. The Open Compliance and Ethics Group Technology Council, which has merged with the Compliance Consortium, has published "Governance, Risk Management, and Compliance: An Operational Approach," to help CIOs plan for compliance, and compliance discussions.

Ideally, your CEO will be well-versed on compliance. But it's more likely, according to Ted Frank, president of the compliance software company Axentis, Inc., and director of the technology council, CIOs will have some explaining to do.

Here Frank provides five questions that every CIO should ask their CEO.

Five compliance questions to ask your CEO

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Wednesday, October 26, 2005

Group moves to cut Sarbanes-Oxley costs

An industry advisory group on Wednesday published proposals that could enable smaller US public companies to cut the cost of complying with the most complex and expensive part of the Sarbanes-Oxley legislation on accounting and corporate governance.

The Committee of Sponsoring Organisations of the Treadway Commission, a private sector body that promotes good financial reporting, is seeking public comment on its guidance for how smaller companies and their auditors can go about implementing the 2002 legislation's requirements on internal controls.

Group moves to cut Sarbanes-Oxley costs

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Three Pillars of Sustainable Compliance

Through the use of a systematic and documented approach for assessing risk, decisions regarding competing claims for enterprise resources can be more confidently addressed on the basis of potential exposure.

In accordance with the latest guidance of May 16, 2005 from the Public Company Accounting Oversight Board (PCAOB), which urged auditors to take a "top-down" approach to compliance based upon assessed risk factors, the BWise product suite combines an underlying compliance framework with an integrated risk management component to help enterprises more effectively assess, manage and minimize corporate risk and compliance exposure. Specific components of the BWise product suite for Enterprise Risk Management include dedicated applications for financial reporting and internal controls; regulatory compliance; operational risk management; strategic risk management; IT governance; and process management for corporate process control. Based on the flexibility of the BWise product suite, dedicated solutions encompassing best practices for Sarbanes-Oxley, Basel II, MiFID and a host of other regulatory requirements can be readily implemented.

Three Pillars of Sustainable Compliance

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Tuesday, October 25, 2005

Insight: Less Loose Change - IT Week

Sarbanes-Oxley and its demand for better internal controls has had a positive effect on business at PRGSchultz, the world’s largest recovery audit firm, according to Ian Griffiths, chief financial officer at the firm’s European operations.

“Since UK subsidiaries of US-listed companies need to comply with the new US regulations regarding internal controls and corporate governance, companies are now drilling down into their control frameworks to see where their internal control and risk management systems are weak or can be improved,” says Griffiths.

“As a result, we are getting more requests to evaluate systems and controls because clients are much more aware of the downsides of poor risk management.” He adds that recovery auditors may be in a position to steal a march on external auditors.

“Sarbanes-Oxley has made companies much more risk-aware. Because we deal with a very niche and specialised area of audit investigation, we are getting requests from clients and other companies to carry out work that is outside our core service offerings,” says Griffiths. “However, due to our forensic, investigative, and analytical skills, we are being asked to get involved in areas which previously we would not have considered to be part of our remit.” He declined to name these areas, however.

Insight: Less Loose Change - IT Week

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Webcast : Global Quality and Compliance for Manufacturers (11/2/2005)

Are you able to cost-effectively measure, improve and maximize your product quality? Does the word "compliance" cause you to jump the track and lose direction? Quality and compliance walk hand-in-hand as both mandatory and challenging processes for manufacturers.

Many world-class manufacturers undertake continuous quality improvement initiatives to meet these challenges to improve operational efficiency and to drive quality across the enterprise. Their initiatives enable them to meet compliance requirements such as WEEE, TREAD Act, DoD UID, 21CFR Part 11 FDA and Sarbanes-Oxley. In addition, many manufacturers meet these challenges by utilizing an integrated manufacturing operation solution that enables visibility across their enterprise.

During this webcast, Jane Biddle, vice president of manufacturing research for Aberdeen Group, will speak about some of the global market strategies that have enabled manufacturers to improve quality efficiently. You'll also hear Carter Johnson, vice president of strategy and business development with Visiprise, Inc., discuss integrated manufacturing operation solutions that allow manufacturers to meet compliance requirements while reducing the cost of quality across the global enterprise.

Webcast : Global Quality and Compliance for Manufacturers (11/2/2005)

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Monday, October 24, 2005

Sarbanes-Oxley Adds to IT Costs But Pushes Companies to Prepare

Compliance burdens posed by the Sarbanes-Oxley Act are proving to be costly for many IT departments, according to Gartner Inc. But companies may be better equipped to meet any new federal regulations thanks to the processes they have developed for complying with the law, IT executives said here last week.
Gartner estimates that the government's Sarbanes-Oxley mandates have led to an average increase of 3.3% in corporate IT costs. The financial reporting law has spurred increased spending in areas such as records management and security, as well as purchases of new tools needed to ensure the accuracy of financial data, the firm says.

At Eaton Corp., a Cleveland-based maker of hydraulic systems, factory automation devices and other industrial products, regulatory compliance issues have boosted IT spending by about 1%, or $3 million, according to CIO Robert Sell.

Sarbanes-Oxley Adds to IT Costs But Pushes Companies to Prepare

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Sunday, October 23, 2005

Investors shrugged off warning in Refco's prospectus

Long before Refco Inc. found itself at the center of a scandal that ultimately led to its collapse, investors should have known that its financial house was in disarray. The company said as much in its initial public offering's prospectus. Refco acknowledged on Page 23 that its auditors had found "significant deficiencies" with how the company staffed its finance department that made it difficult to prepare compliant financial statements. It also noted problems with the procedures Refco used to close its books each quarter.

But investors chose to ignore such risks when they poured big money into Refco's stock during its IPO and thereafter. What a mistake: Weeks later, financial fraud destroyed the company.

The Securities and Exchange Commission demands that companies list all relevant "risk factors" in prospectuses before they are allowed to sell stock to the public. Some need a dozen or more pages to inform investors about all the possible things that could go wrong in their businesses, which could ultimately hurt the stock price.

Investors shrugged off warning in Refco's prospectus

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Saturday, October 22, 2005

Report faults SEC's management

The Securities and Exchange Commission has been plagued by weak financial management that caused budget overruns of nearly $50 million in two years, congressional auditors said in a report released yesterday.

The report by Congress' Government Accountability Office found "ineffective management controls" at the SEC, the agency that enforces rules mandating strong internal controls for public companies. The report amplified a GAO study issued in May that cited weaknesses in the agency's preparation of financial statements and the security of its information.

In their budget planning for the two fiscal years ending next Oct. 1, SEC officials underestimated by $48.7 million the costs of building the agency's new Washington headquarters and upgrading its regional offices in New York City and Boston, the new GAO report found.

Report faults SEC's management

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Friday, October 21, 2005

'What's a Sarbox?' Say Many Shareholders

More than three years after the passage of the Sarbanes-Oxley Act, investors are apparently not too confident that the new governance rules are reining in inappropriate behavior by corporate executives.

According to a new poll conducted by The Wall Street Journal and Harris Interactive, 55 percent of U.S. investors believe that financial and accounting regulations governing publicly held companies are too lenient. That figure rises to 77 percent for male investors ages 45 to 54.

'What's a Sarbox?' Say Many Shareholders

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Poll: Investors See Financial Governance Regulation As Too Lenient

Despite the passing of the Sarbanes-Oxley legislation three years ago, more than half (55%) of U.S. investors think that the financial and accounting regulations governing publicly held companies are too lenient, according to a new Wall Street Journal Online/Harris Interactive Personal Finance. The percentage number jumps to 77 percent among male investors aged 45 to 54.

Regardless of government regulation, investors are more likely to believe that punishment for poor corporate governance should be directed at certain individuals rather than the company as a whole. In addition, almost one-third (30%) of investors say they have reduced or divested their holdings in a company as a result of poor corporate governance.

The online survey of 2,061 U.S. adults was conducted between Oct. 4 and 6, 2005, for The Wall Street Journal Online's Personal Journal Edition.

Poll: Investors See Financial Governance Regulation As Too Lenient

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Thursday, October 20, 2005

One-third of U.S. workers witness unethical behavior

Under Sarbanes-Oxley rules, publicly traded companies must provide a means for workers to report behavior, Rhind said, "but you really have to persuade the employee that this hotline ... is, in fact, confidential. You have to build the employees' confidence before they're going to be willing to report the unethical behavior."

The finding that one-third of workers witness unethical behavior may not be so surprising, given that many executives say they're pushed to produce good numbers, not to act ethically, according to a separate survey.

Asked what is the single most valued quality at their organization, 26% of executives said an "ability to bring in the numbers," while just 6% said "integrity or ethics," according to a survey of about 4,500 executives worldwide by Development Dimensions International, a global human-resources consulting firm.

One-third of U.S. workers witness unethical behavior

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Tuesday, October 18, 2005

Automation and Sarbanes-Oxley Compliance

Most companies are anxious for business unit managers to assume accountability for Sarbanes-Oxley compliance. Yet, they also realize that the biggest pain points in the compliance process — and the biggest opportunities for achieving savings and greater efficiency — lie not in the scramble for better documentation that they focused on in year one, but rather in fundamental areas of financial reporting such as testing, monitoring, and remediation or mitigation.

That's where automation comes in. At Transaction Systems Architects, which develops E-payment software for companies, vice president of financial planning analysis David Konz says responsibility for process documentation, testing, and any remediation or enhancement activities resides with the process owners. Business processes and controls, supporting functions such as accounts payable, accounts receivable, receipt and setup of contracts — TSA is seeking to automate and standardize all of these functions across the organization.

Automation and Sarbanes-Oxley Compliance - Compliance

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Refco Files 4th Largest Bankruptcy in U.S. History

Refco Inc., the futures broker under investigation for hiding a $430 million debt, filed for court protection from creditors in the fourth-largest U.S. bankruptcy.

Shares of Refco plunged, wiping out about $905 million in market value, after the company asked a U.S. bankruptcy court in Manhattan for permission to reorganize its $48.6 billion in liabilities. In the filing, New York-based Refco left out the units it plans to sell to a buyout group led by J.C. Flowers & Co. for $768 million.

Refco's collapse comes 10 weeks after it sold shares to the public for the first time, and may set up a contest between the Flowers group and the government of Dubai, whose offers to purchase the whole company have been rebuffed.

Refco Files 4th Largest Bankruptcy in U.S. History

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Sunday, October 16, 2005

Defining The CIO: An Optimize Research Report

Accenture's Shuh says CIOs have done well at establishing themselves as leaders in their enterprises. "I think CIOs are increasing their span of responsibilities," he says, adding that most CIOs no longer need to make the case for sitting at the executive table; most of them are already there. "Mandates like Sarbanes-Oxley have helped put them at the table. These are full board-level decisions, where at least half of the issues are IT-related. The CIO has to be there."

Looking ahead to 2006, 55% of the CIOs surveyed said they need to improve security and risk management, and 48% said they must improve governance processes and procedures.

Defining The CIO: An Optimize Research Report

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Saturday, October 15, 2005

The Auditguy: ASQ Futures Study

One of the underlying "force of forces" is the integration of management systems. I don't believe enough emphasis is placed here. QES&H are all coming together, along with finance and security. Our profession is no longer focused only on quality. We use the six sigma tools for SarbOx, sales, and supply-chain management.

The Auditguy: ASQ Futures Study

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Friday, October 14, 2005

Lawyer writing 'SOX' book for dummies

"Sarbanes-Oxley for Dummies" is being written by a Milwaukee attorney.

Jill Gilbert Welytok, a lawyer with Absolute Technology Law Group L.L.C., Milwaukee, successfully pitched the idea for the book in early 2004 to John Wiley & Sons Inc., the Hoboken, N.J., publisher of "Dummies" books. It is scheduled to be published in February 2006.

Gilbert Welytok has published several other books with Wiley related to investing and technology. She said Sarbanes-Oxley pertains to all three areas in which she has professional experience.

"It's a great law, but it's creating a lot of confusion," Gilbert Welytok said.

Lawyer writing 'SOX' book for dummies

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Accountancy Age: Refco was not Sarbox compliant

Refco, the futures broker that is the subject of an SEC fraud probe, was still not Sarbox compliant when it raised $583m (£333.4m) on the New York Stock Exchange in August. In the prospectus issued before its listing, Refco admitted that it would be exposed to risks relating to the evaluation of its internal controls as required by section 404 of the Sarbanes-Oxley act, which was introduced in 2002 to prevent corporate scandals such as Enron and WorldCom.

Refco said at the time that it was confident of achieving Sarbanes-Oxley compliance by the deadline of 28 February, 2007.

Accountancy Age: Refco was not Sarbox compliant

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Thursday, October 13, 2005

FASB and the Liability-Equity Split

Breaking up is hard to do in love — and in accounting. For the Financial Accounting Standards Board, one of its biggest technical challenges has been a project addressing the separate classification and measurement of a financial instrument that has characteristics of both liability and equity.

Last week FASB continued to discuss the issue, which over the years has become "much harder than I thought it would be," according to board member Michael Crooch. The difficulty has been in devising a rule that consistently divides the instrument, he explains, while also yielding an answer that makes sense to all board members — and is not subject to being circumvented by "very smart people on Wall Street." Convertible debt is the classic example, notes Crooch: The instrument could be paid off as a debt, or it could be exchanged for shares (that is, converted to equity).

FASB and the Liability-Equity Split

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Oversight : A process of improvement: Sarbox is never simple, but it can be less complex.

How many processes does your company have? A simple question if your firm has documented them all as part of meeting Sarbanes-Oxley requirements. But ensuring actual compliance? That's another matter.

So who's going to help minimise the time the nasty auditors spend going through all those processes? You guessed it. Business software companies can help you meet your compliance needs, they plead.

Oversight : A process of improvement: Sarbox is never simple, but it can be less complex.

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Sarbanes-Oxley audit reforms punish smaller corporations

Offering his assessment that supervisory processes adopted by the Public Company Accounting Oversight Board are "working well," board chairman William McDonough turned in his resignation, saying he would step down by Nov. 30.

If he thinks the processes are working well, he needs to leave sooner than that.

McDonough, the PCAOB's first chairman, assumed the post (at a salary of $550,000 a year) with a broad mandate from Congress to restore investor confidence in public-traded companies after Enron unexpectedly collapsed.

"I came to the PCAOB in June 2003 to help it fulfill the great responsibilities assigned to it by the Sarbanes-Oxley Act to protect investors in U.S. companies by overseeing the accounting firms that audit these companies," he said.

Sarbanes-Oxley audit reforms punish smaller corporations

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Wednesday, October 12, 2005

Calling all accountants

Qualified accountants are in demand. Most graduates will find jobs, and those with internships and professional affiliations are even more likely to land the coveted positions in major accounting firms such as Ernst & Young and PricewaterhouseCoopers, experts say.

At last week's job fair, there were long lines at the booths run by the top public accounting firms. Recruiters from smaller firms saw less traffic, but were eagerly accepting resumes.

The competition is also pushing up wages.

The most-cited reason for the shortage is the increased demand for accountants created by the federal Sarbanes-Oxley Act. The "SOX" law, passed in 2002 in the wake of corporate-accounting scandals, strengthens auditing standards for publicly traded companies.

Calling all accountants

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New York Times: Supreme Court Bolsters S.E.C.'s Ability to Freeze Pay

The Supreme Court on Tuesday let stand a ruling against two former executives of Gemstar-TV Guide International, bolstering the ability of the Securities and Exchange Commission to freeze payments to corporate executives under federal accounting fraud law.

The S.E.C. gained the ability to block payments to executives in the Sarbanes-Oxley Act of 2002, passed by Congress in response to a succession of big-name corporate accounting frauds.

The commission used the provision in its investigation of a $250 million accounting fraud scandal at Gemstar, which owns TV Guide, by freezing $37 million in termination payments to the former chief executive, Henry C. Yuen, and the former chief financial officer, Elsie M. Leung, while its investigation was pending.

New York Times: Supreme Court Bolsters S.E.C.'s Ability to Freeze Pay

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Diller Blasts SOX

Media titan Barry Diller said lawmakers should revisit Sarbanes-Oxley, citing that the high cost of compliance is negatively impacting American businesses. He said "99.9 percent of the processes" in Sarbanes-Oxley have nothing to do with corporate malfeasance.

Diller Blasts SOX

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Tuesday, October 11, 2005

Cross-listing in U.S. boosts value - NYSE study

Overseas companies that cross-list their shares in the United States command a significantly higher valuation than those that don't, a study released by the New York Stock Exchange said on Tuesday.

The findings coincide with a further push by the NYSE to attract foreign listings to the Exchange, with Chief Executive John Thain traveling to India and China in the week beginning October 17 to meet managers of prospective listed companies, regulatory officials and government leaders.

The cross-listing study, conducted by faculty members at Ohio State University and the University of Toronto, estimates that cross-listed companies are valued on average nearly 14 percent higher than those that aren't. Companies listed on a major exchange such as the NYSE have a premium of about 31 percent, the study said.

"The study shows that a U.S. listing is worth it, despite the incremental cost of compliance with Sarbanes-Oxley," NYSE Executive Vice President Noreen Culhane said in a statement.

Cross-listing in U.S. boosts value - NYSE study

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Outside the Sar-box

The chairman of the Public Company Accounting Oversight Board, William McDonough, turned in his resignation recently, saying that he would step down no later than November 30, 2005, and that the supervisory processes the board adopted are "working well."

If he thinks the processes are working well, he needs to leave sooner than that. In light of the lack of accountability, it is not surprising that the Sarbanes-Oxley Act has done more to hurt law-abiding, honest American businesses than it has to root out the corrupt, dishonest practices it was supposed to prevent.

Outside the Sar-box

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AAO Weblog: PwC Chairman Nally On Sarbanes-Oxley and Leadership

Financial Times carries an interview with Dennis Nally, the chairman of PricewaterhouseCoopers’ United States business, under the headline “The Auditor’s Progressive Voice.” And he really may be just that: he’s got a pretty sober view of the auditor’s role in the financial landscape. He doesn’t lambast Sarbanes-Oxley to curry favor with clients, nor does he view it as a golden egg-laying goose.

AAO Weblog: PwC Chairman Nally On Sarbanes-Oxley and Leadership

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Diller dissess Sarbanes-Oxley

Congress should take a hard look at the Sarbanes-Oxley Act because the high cost of complying with the law's requirements is hurting U.S. business, media mogul Barry Diller told The Post yesterday.

"Congress has a duty to revisit Sarbanes-Oxley, to see what was smart about it and what wasn't, and conform it to sensible and current practice," said Diller, CEO of IAC/InterActiveCorp, an Internet holding company.

Diller dissess Sarbanes-Oxley

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Monday, October 10, 2005

Arrow Blames Sarbox for Earnings Hit

Officials at medical-supplies manufacturer Arrow International Inc. said that compliance with Section 404 of the Sarbanes-Oxley Act played a big role in the company's huge drop in earnings during the most recent quarter. Section 404 requires companies to document their internal controls.

Arrow reported that net income for the quarter ended August 31 decreased 65.3 percent, to $5 million, down from $14.4 million recorded in the same quarter last fiscal year. The drop was "primarily from the company's ongoing evaluation of internal controls over financial reporting related to Section 404."

Arrow Blames Sarbox for Earnings Hit

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Hyperion Reports Sarbanes-Oxley Compliance Fueling Improvements in Business Performance

Hyperion, the global leader in business performance management (BPM) software, said 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.

Hyperion Reports Sarbanes-Oxley Compliance Fueling Improvements in Business Performance

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Sunday, October 09, 2005

McCrery, Oxley, DeLay Use Contributions for Jets, Resorts, Golf

Next on the list is Oxley, 61, whose name has been synonymous with good corporate governance since his sponsorship of the 2002 Sarbanes- Oxley law, which cracked down on fraudulent accounting by companies. The Ohio Republican spent at least $93,876 on luxuries, including more than $40,000 at a Vail ski resort in January.

In the first eight months of the year, Oxley took at least 14 trips on corporate aircraft, including those of Houston-based Stanford Financial Group Co., which has a fleet of Gulfstream luxury jets. On the ski trip to Vail, he charged his PAC for ski wear, lodging and lift tickets, and hosted at least three golf fundraisers. While he was in New York for a May fundraiser, his PAC paid for a stay at the Peninsula Hotel on 5th Avenue, where standard rooms start at $625 a night.

McCrery, Oxley, DeLay Use Contributions for Jets, Resorts, Golf

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CIO Conversation: Computer Associates CCO

Gnazzo: I would like to split out SOX [Sarbanes-Oxley Act] from general compliance. Prior to SOX, compliance programs consisted of things that were more than financial issues. Now along comes SOX, and what SOX says is your financials needs to be documented. How you handle your books and records needs to be documented. Some people might have said, 'Gee, weren't they documented before?' To a large extent they were, but over time some of those procedures changed, and the documentation wasn't changed. What became expensive was the interpretation of SOX, the testing, the requirement of having another set of auditors besides your independent auditors. So everybody is trying to do this thing completely right, and because this is a first-time effort, even companies that might have thought they were compliant prior to SOX, they are spending the money to make sure they are compliant.

CIO Conversation: Computer Associates CCO

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Saturday, October 08, 2005

Lorman Education Services presents Sarbanes-Oxley Act seminar on November 18

The Sarbanes-Oxley Act, also referred to as “Sarbox” or “SOX,” was enacted by Congress in response to the major corporate, accounting and document destruction scandals that rocked the stock markets recently. In an effort to restore corporate ethics, controls and meaningful disclosure to shareholders – and ultimately restore investor confidence – SOX establishes a framework for corporate accountability, including strict new standards and penalties for violations in the areas of corporate governance, disclosures, audits, financial reporting and conflicts of interest.

Although originally enacted only for public companies, SOX is quickly becoming the “standard of care” for privately-owned and not-for-profit companies. The IRS and the office of inspector general are adopting SOX principles to raise the standards of corporate governance and management accountability. Regulators are examining the independence of boards and audit committees, as well as the effectiveness of compliance policies and procedures related to reporting information to management and directors, document retention and destruction, and treatment of corporate “whistleblowers.” This seminar will review the SOX requirements and penalties; give practical solutions to assist in compliance readiness; help to clarify the standards set for management and directors; and examine the impact liability, risk and workflow.

Lorman Education Services presents Sarbanes-Oxley Act seminar on November 18

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Friday, October 07, 2005

Auditor: Denver Needs Whistleblower Law

The city has no whistleblower protection ordinance and existing rules only provide employees "modest coverage related to ethics investigations," Gallagher said. He is proposing the city follow the Sarbanes-Oxley Act, a corporate reform law Congress enacted in 2002 after the Enron Corp. accounting scandal.

"Sarbanes-Oxley was enacted to protect shareholders of corporations," Gallagher wrote. "The citizenry and taxpayers of Denver are the ‘shareholders’ of our city government, (and) they deserve the same kind of protection."

Rocky Mountain News: News

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Claire's Alternate Version of Reality: Sun and SarbOx

My thoughts: The question about Solaris would not have been on the radar screen 2 years ago. The combination of Solaris 10 innovations + disruptive free pricing of Solaris + open source via the OpenSolaris project have changed the landscape. Solaris and OpenSolaris are firmly on the radar screen for customers and developers and technologists. Especially when you consider the context - the Sun/AMD partnership, the 2004 acquisition of Andy Bechtolsheim's Kealia company, the new x64 Galaxy boxes from Bechtolsheim's team, Sun's commitment to management of your data and SarBox compliance, the throughput computing advances in the upcoming Niagara hardware, the Java ES platform, the promising announcement of a Sun/Google partnership...

Claire's Alternate Version of Reality: Sun and SarbOx

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Sarbox No Picnic For Teddy Bear Maker

Vermont Teddy Bear Company CEO Elisabeth Robert feels the weight of the world lifted from her shoulders. The weight Robert says Vermont Teddy Bear "got out from under" was the Sarbanes-Oxley Act, the 2002 anti-fraud bill enacted by Congress in the wake of Enron, WorldCom, and other large-scale corporate scandals.

Among other strict accounting rules, Sarbox, as it's come to be known, requires public-company CEOs to sign off on financial statements, reinforces the oversight role of company directors, and puts a firewall between accountants and executives. Under Section 404, it also requires companies to file an independent assessment of internal controls.

Sarbox No Picnic For Teddy Bear Maker

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Thursday, October 06, 2005

Sarbanes Oxley Compliance Major Factors in Disaster Recovery Plan

Hanson’s current initiative was driven by Sarbanes Oxley (SOX) compliance. The management team wanted to ensure that Hanson included disaster recovery as an integral part of the SOX plan. In addition to addressing their immediate need for ERP recovery Hanson needed a solution flexible enough to support new platforms as their disaster recovery plan evolved.

“As part of our overall plan we define recovery objectives for each of our key applications. We were looking for a solution that would work across the breadth of our infrastructure,” said Marks. “Not only does TDPS work transparently with our existing high-availability systems, Topio gives us the flexibility to use the same solution for other platforms and applications as we expand our initiative. This will save us time and money.”

“The ability to rapidly replicate business critical data should be considered one of the core components of any disaster recovery plan. Its significance is dramatically increased when you consider the impact of corporate compliance and regulatory mandates” said Chris Hyrne, vice president of marketing, Topio, Inc.

Sarbanes Oxley Compliance Major Factors in Disaster Recovery Plan

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Public companies see lower compliance costs

Public companies say that they expect to spend slightly less this year than last on complying with the requirements set out in the Sarbanes-Oxley Act of 2002. A survey of almost 300 companies, conducted by the American Electronics Association and the Nasdaq Stock Market Inc. found that companies with a market capitalization of more than $120 million expect to see their costs decline 7.4 percent from last year. Smaller companies, with market capitalizations of less than $120 million, expect to see virtually no change in their costs.

Public companies see lower compliance costs

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Stop strangling startups

Evidence continues to mount that the 2002 Sarbanes-Oxley accounting law unduly burdens small publicly traded companies. The Securities and Exchange Commission has spent the last year and a half compiling the evidence. If anyone in Congress bothers to read the horror stories its committee on small publicly traded companies has compiled, they'll know they need to loosen Sarbanes-Oxley's requirements for smaller firms and startups.

Here's what the SEC heard from Donald S. Perkins, chairman of the board of Nanophase Technologies, a small Illinois-based maker of nanocrystalline materials: "We have only 50 employees. Three of these are finance and accounting professionals... In 2004 over $259,000 (5% of our sales) was spent and over 1,000 hours were used for us to produce a SOX-404 result that showed no material weaknesses."

Stop strangling startups

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Log data management is a challenging Sarbanes-Oxley issue

Companies are now finding that log management is a cornerstone best practice in their compliance efforts. Sarbanes-Oxley 404 Internal IT Control requirements infer rigorous end-to-end Log Management and Archival. Driven by compliance, security and risk mitigation, enterprises of all kinds are standardizing and automating their log management processes – from storage and reporting to proactive alerting on security and other issues. The automation, search and analysis of all this data can be characterized as ‘log intelligence’ for executives, and provides compliance conformance and risk mitigation for an enterprise.

A combination of compliance and risk mitigation needs are driving these industries away from disparate, homegrown log management, or niche security event management. The new challenge is about capturing all logs, from any device, and then systematically storing, analysing, reporting and alerting about them in seconds.

The market's move towards industry standard log data management, storage and reporting, and the global adoption of these technologies to address compliance and risk mitigation is an enormous opportunity for Net Report and a keystone to meeting the challenge facing companies seeking Sarbanes-Oxley compliance.

Log data management is a challenging Sarbanes-Oxley issue

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Wednesday, October 05, 2005

Outgoing official calls for patience on Sarbanes-Oxley

William McDonough has led the Public Company Accounting Oversight Board (PCAOB) since its inception in 2002 to help publicly traded companies fall in line with strict new financial-reporting mandates imposed by Congress to heal shaken investor confidence. McDonough’s recent resignation, however, leaves an opening for Sarbanes-Oxley’s vocal corporate critics, who would like the law’s governance standards to be relaxed.

Addressing a group of trade-association officials and lobbyists, McDonough attributed Sarbanes-Oxley’s effectiveness to a higher “fear quotient” among corporate executives of the harsh fallout from accounting fraud. He acknowledged that Section 404, the provision of Sarbanes-Oxley instructing companies to conduct often-complex internal audits, had created a chorus of potentially justified complaints from businesses.

Outgoing official calls for patience on Sarbanes-Oxley

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Will Sarbanes-Oxley Force Small Companies to Privatize?

More than two years into the Sarbanes-Oxley Act of 2002, it is becoming increasingly clear that small and mid-sized publicly traded companies are having difficulty to complying with SOX. SOX makes no distinction between large companies and small companies in its compliance requirements. As such, trying to achieve SOX compliance is placing a much larger burden on small public companies, companies with substantially fewer resources and personnel than their larger competitors.

Where a large cap company is expending 3-5% of its gross revenue in setting up and orchestrating its compliance program, small cap companies may be facing even greater hurdles and expense due to their comparatively smaller size. For instance, where large companies generally have an in-house accounting department that can be arranged to bear much of the burden, small companies often don’t have such resources and are required to set up an entirely new department, hiring new staff and facing significant investment.

Will Sarbanes-Oxley Force Small Companies to Privatize?

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Oracle CRM blog: SOX implications & IS Control Objectives for Incentive Compensation

One such concern is related to the Sarbanes Oxley. Some of the broader concepts in this article are from ISACA site, which this blog tries to apply to Incentive compensation implementation.Questions we will address are related to the concerns a manager or the top management will in general have regarding Sarbanes Oxley; and how does this boil down to decision making in Incentive Compensation.Sarbanes Oxley mandates that internal 'controls' are in place and the top management especially the CEO and CFO have to personally attest to this. This attestation is usually done every quarter.

Oracle CRM blog: SOX implications & IS Control Objectives for Incentive Compensation

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Tuesday, October 04, 2005

Investor's Business Daily: Sarbanes-Oxley Law Offers Side Benefits

Many business groups, executives and pundits have lashed out at the Sarbanes-Oxley Act since Congress passed the measure in 2002. Some call the law unfair, a tax on business or worse.

Section 404, the most controversial part of the law, took effect in November. It requires CEOs and chief financial officers to vouch — in writing — for the accuracy of their financial results. They must set up and document broad internal controls. Those who fail to comply face fines or even prison.

Investor's Business Daily: Sarbanes-Oxley Law Offers Side Benefits

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Judge Rules Sarbox 304 Reserved for SEC

A federal judge has ruled that shareholders cannot file derivative lawsuits under Section 304 of the Sarbanes-Oxley Act, according to Law.com. Section 304 allows for the disgorgement of profits and bonuses from top corporate executives in alleged accounting scandals.

The Website points out that the decision by U.S. District Judge Stewart Dalzell is the first that addresses whether Section 304 creates an implied private right of action. The judge made it clear that only the Securities and Exchange Commission can enforce the provision, according to the report.

Judge Rules Sarbox 304 Reserved for SEC

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404 delay or procrastination

Since the passage of Sarbanes-Oxley, the outcry from small filers on the unfairness of "one size fits all" reputation with regard to Section 404 compliance reminded me of an old TV spot for Midas where a greasy mechanic is holding an absurdly sized muffler and a rubber mallet while assuring the owner that he would "make it fit."

Filers both small and large had, literally, from the moment George W. Bush put his pen to sign SOX into law, bemoaned the costs in both money and human capital to implement the internal controls certification of the sweeping corporate reform act.

The highly criticized rule, as most know or at least should know, requires that publicly traded companies assess the controls they have in place as a preventive measure against accounting fraud, and have their external auditor attest to said controls. For investors, that auditor assessment must be featured in the annual report. Included, of course, must be a clear explanation of any material weakness that was uncovered during that attestation process.

404 delay or procrastination

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Monday, October 03, 2005

Harrison: Sarbanes-Oxley Offers 'Golden Opportunity' for HR Execs

People say that Sarbanes-Oxley is a heavy handed law and has cost U.S. businesses $35 billion. But there is not much evidence companies are becoming more compliant. Executives need to "get it" because misconduct can end up costing $100 million and bring jail terms. But penalties can be reduced if firms can show that they are doing their best to be in compliance with regulations and that corporate culture does not encourage law-breaking.

Still, there are plenty of cynics out there who doubt if this will take. They say that there is going to be an ethics fatigue in the boardroom. But if companies want consumers to trust them, be a good place to work and have people invest in their stock, they need to behave in an ethical way. Americans were angry, and rightly so, at what happened with companies like Enron and Tyco and WorldCom.

Harrison: Sarbanes-Oxley Offers 'Golden Opportunity' for HR Execs

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Infectious Greed: SarbOx and The Trouble with IPOs

Of course, most venture investors want to know when that will change. While there are many things underlying the anti-IPO problems, many blame Sarbanes-Oxley for making being a public company less palatable, so it is interesting to see that on the same day we have this latest data confirming how ugly IPOs remain there is a "let's fix SarbOx" editorial in the Wall Street Journal (written by Bob Dole and Tom Daschle).

Infectious Greed: SarbOx and The Trouble with IPOs

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Sarbanes-Oxley: Worse than No Solution at All?

While many executives agree that some law was necessary, many have also become disillusioned with the drain on time and resources that it requires. These requirements can fall disproportionately hard on smaller public companies, many of which have less formal financial-reporting processes than larger older companies, and fewer staffers to create or execute any newly required processes.

USA Today reported in October 2003 that one such publicly traded company—hardware wholesaler Moore-Handley, which had 2002 sales of $151 million—was going so far to avoid falling under SarbOx rules that it was delisting itself from the Nasdaq exchange.

Company executives estimated compliance would cost the company $250,000, but Moore-Handley had only made a net profit of $300,000 in the last fiscal year. So it made economic sense for Moore-Handley to react the way it did.

This kind of cost consequence may spread to other companies as well.

Sarbanes-Oxley: Worse than No Solution at All?

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Saturday, October 01, 2005

Sarbanes-Oxley’s silver lining: Compliance leads to risk management

While many companies find that complying with Sarbanes-Oxley (SOX) reporting requirements is a time consuming and potentially costly undertaking, some are discovering a silver lining. Compliance, it turns out, is forcing companies to understand and quantify risk and is helping them develop a structured approach to managing risk.

While company executives routinely mentally assess risk, it is enlightening to lay out the issues in a single document. This exercise, removed from the immediacy of SOX compliance, not only identifies current risk, but also provides a planning tool to help move the company forward.

Looking Ahead Five Years. By using their current risk assessment to evaluate the operating landscape five years out, companies are making informed decisions about their infrastructure needs.

Sarbanes-Oxley’s silver lining: Compliance leads to risk management

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