November 14, 2005
CFO's Find Value in Sarbanes-Oxley 404
Even with all the complaining about Sarbanes-Oxley Section 404, CFO's are beginning to see benefits to really pulling back the covers on this whole internal controls issue. When they first started projects, many felt that they had really great internal controls.
But as they began to look at controls in depth, they discovered that processes were broken, inefficient and certainly lacked the proper controls. In some cases, controls were too tight and in some cases, processes were so fragile due to extreme amounts of manual intervention. But in the end, many true problems were detected.
The legislation works! The number of deficiencies says it all. Stay the Course Mr. Cox.
An excerpt from an article is here:
Most CEOs -- but not all. A few companies are discovering, to their surprise, that taking stock of internal controls can help beyond just unmasking accounting problems. By forcing executives to dig deep into how their companies get work done, Section 404 is enabling businesses to cut costs and boost productivity. "There truly is a silver lining" in 404, says Gary Moran, managing director of Alvarez & Marsal Business Consulting LLC. His firm and CFO Research Services sponsored a report that discusses the unexpected benefits that 404 yielded at Cisco Systems, Genentech, and other companies.
"DIRTY LITTLE SECRET"
Of course, even the most onerous rules handed down from Washington hold some advantage for somebody. In the case of 404, the vast majority of companies still thinks it's overkill. In the FEI survey, 94% of top executives at the 217 public companies it polled said the costs of compliance far outstrip any gains.But for some companies, 404 documentation is turning out to be a catalyst for computer-system upgrades and other efficiency moves that chief financial officers have long had on the back burner. "The dirty little secret is that many CFOs love 404" because it has given a boost to initiatives that had trouble getting traction, says William J. McDonough, chairman of the Public Company Accounting Oversight Board, the agency that turned Sarbanes-Oxley's language on Section 404 into specific directions for management and auditors.
For the complete article, see www.businessweek.com
But as they began to look at controls in depth, they discovered that processes were broken, inefficient and certainly lacked the proper controls. In some cases, controls were too tight and in some cases, processes were so fragile due to extreme amounts of manual intervention. But in the end, many true problems were detected.
The legislation works! The number of deficiencies says it all. Stay the Course Mr. Cox.
An excerpt from an article is here:
Most CEOs -- but not all. A few companies are discovering, to their surprise, that taking stock of internal controls can help beyond just unmasking accounting problems. By forcing executives to dig deep into how their companies get work done, Section 404 is enabling businesses to cut costs and boost productivity. "There truly is a silver lining" in 404, says Gary Moran, managing director of Alvarez & Marsal Business Consulting LLC. His firm and CFO Research Services sponsored a report that discusses the unexpected benefits that 404 yielded at Cisco Systems, Genentech, and other companies.
"DIRTY LITTLE SECRET"
Of course, even the most onerous rules handed down from Washington hold some advantage for somebody. In the case of 404, the vast majority of companies still thinks it's overkill. In the FEI survey, 94% of top executives at the 217 public companies it polled said the costs of compliance far outstrip any gains.But for some companies, 404 documentation is turning out to be a catalyst for computer-system upgrades and other efficiency moves that chief financial officers have long had on the back burner. "The dirty little secret is that many CFOs love 404" because it has given a boost to initiatives that had trouble getting traction, says William J. McDonough, chairman of the Public Company Accounting Oversight Board, the agency that turned Sarbanes-Oxley's language on Section 404 into specific directions for management and auditors.
For the complete article, see www.businessweek.com
