August 31, 2004
Good Governance pays Dividends
Just when you thought the costs of good goverance had no upside. Maybe companies with good governance are focused on results and this is part of the package. Here is an excerpt from an article from computerworld.com on the positive relationship between good governance and profitability.
"Weill and Ross, research scientists at the Center for Information Systems Research at MIT's Sloan School of Management, do just that and more. For instance, a CISR study of 256 global companies reveals that the profits of companies with top-notch IT governance practices are 20% higher than those of companies with poor IT governance." See the complete article at:
http://www.computerworld.com/securitytopics/security/hacking/story/0,10801,95477,00.html
For information on the Issues Central Sarbanes-Oxley Compliance Playbook(tm) see www.issuescentral.com
"Weill and Ross, research scientists at the Center for Information Systems Research at MIT's Sloan School of Management, do just that and more. For instance, a CISR study of 256 global companies reveals that the profits of companies with top-notch IT governance practices are 20% higher than those of companies with poor IT governance." See the complete article at:
http://www.computerworld.com/securitytopics/security/hacking/story/0,10801,95477,00.html
For information on the Issues Central Sarbanes-Oxley Compliance Playbook(tm) see www.issuescentral.com
August 30, 2004
IT Controls Critical under Sarbanes- Oxley Section 404
In August 2002, when the Sarbanes-Oxley Act was passed, many companies focused only on the financial statement aspects to controls. To those who understood that complying with the Act meant far more, they began to focus on the systems (IT) that controlled the data and people (HR) who entered/managed the data. An interesting article from computerworld.com highlights the continued and increase focus on this very important topic.
"Sarbanes-Oxley is having a two-pronged affect on IT asset management practices. Under Section 404 of the act, companies are required to attest to the internal controls that are used for financial reporting. These include IT-related controls that firms have in place to effectively track and monitor hardware, plus software used to support financial reporting. Companies are also required under Sarbanes-Oxley to disclose to regulators all material financial exposures they have, including IT equipment leases and licensing agreements, which have to be tracked closely."
See the complete article
For more information on Issues Central Sarbanes-Oxley Compliance Playbook(tm) see www.issuescentral.com
"Sarbanes-Oxley is having a two-pronged affect on IT asset management practices. Under Section 404 of the act, companies are required to attest to the internal controls that are used for financial reporting. These include IT-related controls that firms have in place to effectively track and monitor hardware, plus software used to support financial reporting. Companies are also required under Sarbanes-Oxley to disclose to regulators all material financial exposures they have, including IT equipment leases and licensing agreements, which have to be tracked closely."
See the complete article
For more information on Issues Central Sarbanes-Oxley Compliance Playbook(tm) see www.issuescentral.com
August 27, 2004
PCAOB shows its Teeth
The Public Company Accounting Oversight Board (PCAOB), established in accordance with the Sarbanes-Oxley Act of 2002, just issued a wrist slap to the accounting firms yesterday in a news release.
They found in that in limited inspections "significant audit and accounting issues that were missed by the firms and identified concerns about significant aspects of each firm's quality controls systems."
While the report goes onto say that "criticisms do not reflect any broad negative assessment of the firms' audit practices...”.
What this means to public companies and their Section 404 certifications is: you better make sure YOU are certain about your internal controls. While your accounting firm has to sign off that everything is all right, they do not have the final word. Doing the minimum for any publicly held company may not yield the results a CFO and CEO wants.
For more information on Issues Central Sarbanes-Oxley Compliance Playbook (tm) see www.issuescentral.com
They found in that in limited inspections "significant audit and accounting issues that were missed by the firms and identified concerns about significant aspects of each firm's quality controls systems."
While the report goes onto say that "criticisms do not reflect any broad negative assessment of the firms' audit practices...”.
What this means to public companies and their Section 404 certifications is: you better make sure YOU are certain about your internal controls. While your accounting firm has to sign off that everything is all right, they do not have the final word. Doing the minimum for any publicly held company may not yield the results a CFO and CEO wants.
For more information on Issues Central Sarbanes-Oxley Compliance Playbook (tm) see www.issuescentral.com
August 26, 2004
SEC Delay in Accelerated Filing of Periodic Reports does not affect 404 filings
It seems that the SEC is staying on track to get companies listed on US exchanges to make their internal control assertions in the near term. At the same time, they are listening to concerns about too many regulations coming due at the same time. This shows an interest in transparency without being causing undue upheaval in the markets.
For the complete news release, see the SEC website article at: http://www.sec.gov/news/press/2004-121.htm
For more information about Issues Central Sarbanes-Oxley Compliance Playbook (tm) see www.issuescentral.com
For the complete news release, see the SEC website article at: http://www.sec.gov/news/press/2004-121.htm
For more information about Issues Central Sarbanes-Oxley Compliance Playbook (tm) see www.issuescentral.com
August 25, 2004
SEC to study Off-Balance Sheet Debt
The SEC is determined to enforce all aspects of the Sarbanes-Oxley Act and all supporting rules. To continue the trend toward transparency on publicly held company balance sheets, they are ordering a study of breaches in this area. They do not want more Enrons on their watch!
An article from the Washington Times highlights this concern:
"New Securities and Exchange Commission rule, known as "FIN 46," was implemented this year to cut down on Enron-style accounting that hid corporate debt, the Financial Times reported Tuesday.
But FIN 46 has been honored mostly in the breach, said Donald Nicolaisen, the SEC's top accountant."
See the complete article at: http://washingtontimes.com/upi-breaking/20040824-122248-5963r.htm
For more information on Issues Central Sarbanes-Oxley Compliance Playbook (tm) see www.issuescentral.com
An article from the Washington Times highlights this concern:
"New Securities and Exchange Commission rule, known as "FIN 46," was implemented this year to cut down on Enron-style accounting that hid corporate debt, the Financial Times reported Tuesday.
But FIN 46 has been honored mostly in the breach, said Donald Nicolaisen, the SEC's top accountant."
See the complete article at: http://washingtontimes.com/upi-breaking/20040824-122248-5963r.htm
For more information on Issues Central Sarbanes-Oxley Compliance Playbook (tm) see www.issuescentral.com
Final Rules Published for Whistleblower for Sarbanes-Oxley Act
It's final folks! The final rules are out on Sarbanes-Oxley Section 806. They are managed by OSHA. This provides standardization for Whistleblower statutes for all federal legislation.
"WASHINGTON -- The Occupational Safety and Health Administration has published in the Federal Register a final rule establishing procedures for the handling of whistleblower complaints under the Corporate and Criminal Fraud Accountability Act of 2002, also known as the Sarbanes-Oxley Act, one of 14 laws with whistleblower protections administered by OSHA."
For the complete listing from the Federal Register see: http://frwebgate2.access.gpo.gov/cgi-bin/waisgate.cgi?WAISdocID=443323129721+0+0+0&WAISaction=retrieve
For complete information on Issues Central Sarbanes-Oxley Compliance Playbook (tm) see www.issuescentral.com
"WASHINGTON -- The Occupational Safety and Health Administration has published in the Federal Register a final rule establishing procedures for the handling of whistleblower complaints under the Corporate and Criminal Fraud Accountability Act of 2002, also known as the Sarbanes-Oxley Act, one of 14 laws with whistleblower protections administered by OSHA."
For the complete listing from the Federal Register see: http://frwebgate2.access.gpo.gov/cgi-bin/waisgate.cgi?WAISdocID=443323129721+0+0+0&WAISaction=retrieve
For complete information on Issues Central Sarbanes-Oxley Compliance Playbook (tm) see www.issuescentral.com
Governance Practices used to rank Mutual Funds
Good governance practices continue to be a way for companies to positively differentiate and help share prices. Companies who are embracing good governance are winning big. We see this trend increasing...
An good news item on this topic is from MorningStar:
"Morningstar Inc. on Tuesday introduced a system for ranking mutual funds based on how closely they hew to the best industry practices on governance."
For the complete article see: http://www.chicagotribune.com/business/chi-0408250301aug25,1,1836989.story?coll=chi-business-hed
Complete information on Issues Central Sarbanes-Oxley Compliance Playbook (tm) can be found at www.issuescentral.com
An good news item on this topic is from MorningStar:
"Morningstar Inc. on Tuesday introduced a system for ranking mutual funds based on how closely they hew to the best industry practices on governance."
For the complete article see: http://www.chicagotribune.com/business/chi-0408250301aug25,1,1836989.story?coll=chi-business-hed
Complete information on Issues Central Sarbanes-Oxley Compliance Playbook (tm) can be found at www.issuescentral.com
August 24, 2004
Interesting new for "Pump & Dump" scam...reported by the SEC
Wow, we thought we had seen everything...Check this out: the latest scam is a "wrong number message" left on your home phone with a hot stock tip. Creativity never ceases...
For the complete article check out:
http://www.sec.gov/news/press/2004-113.htm
Information on Issues Central Sarbanes-Oxley Compliance Playbook (tm) see www.issuescentral.com
For the complete article check out:
http://www.sec.gov/news/press/2004-113.htm
Information on Issues Central Sarbanes-Oxley Compliance Playbook (tm) see www.issuescentral.com
Will Section 404 Costs Decline in Second Year....?
Concerns about Sarbanes-Oxley Section 404 continue to mount as deadlines loom. Many companies are not investing in any form of technology or infrastructure to manage their Section 404 efforts. Therefore, costs in the second year may not go down.
This article from TheStreet.com highlights this issue:
"Many observers expect the costs to subside somewhat after the first year, attributing much of the jump in fees and expense to companies having to get up to speed with the new rule. But some companies and experts warn that many of the costs may be a continuing expense.
Under SEC rules, for instance, companies and their auditors will have to test their control systems annually.
How much of the costs are one-time and how much are recurrent is a "real concern," said Jack Endean, president of the American Business Conference, which represents small and medium-sized growth companies."
For the entire article see: http://www.thestreet.com/stocks/troywolverton/10179706_3.html
See more information about Sarbanes-Oxley Compliance Playbook (tm) at www.issuescentral.com
This article from TheStreet.com highlights this issue:
"Many observers expect the costs to subside somewhat after the first year, attributing much of the jump in fees and expense to companies having to get up to speed with the new rule. But some companies and experts warn that many of the costs may be a continuing expense.
Under SEC rules, for instance, companies and their auditors will have to test their control systems annually.
How much of the costs are one-time and how much are recurrent is a "real concern," said Jack Endean, president of the American Business Conference, which represents small and medium-sized growth companies."
For the entire article see: http://www.thestreet.com/stocks/troywolverton/10179706_3.html
See more information about Sarbanes-Oxley Compliance Playbook (tm) at www.issuescentral.com
August 23, 2004
Whistleblower Provisions Tested...
It is interesting when we start to see that Sarbanes-Oxley continues to have impact on the thinking of foreign corporations. The United States has always been straightforward in admitting problems of every sort. For sure, problems in corporate corruption needed attention. What is great to see is that this leadership is being understood by others in locations such as Switzerland - not a country known for openness.
The need for candor really is universal, even for those which do not embrace it. See the complete article for more on this topic at:
http://www.thelawyer.com/cgi-bin/item.cgi?id=111686&d=11&h=24&f=46
For more about Sarbanes-Oxley Compliance Playbook (tm), see www.issuescentral.com
The need for candor really is universal, even for those which do not embrace it. See the complete article for more on this topic at:
http://www.thelawyer.com/cgi-bin/item.cgi?id=111686&d=11&h=24&f=46
For more about Sarbanes-Oxley Compliance Playbook (tm), see www.issuescentral.com
August 19, 2004
Internal Controls still the buzz with Nortel Audit Committee
Nortel, once a high flyer in telecom, continues to report problems with its internal controls and accounting practices. Interesting that Sarbanes-Oxley legislation is so closely associated by laymen with Enron in the United States. But in fact Nortel's spectacular meltdown touched many more small shareholders than Enron did.
The audit committee at Nortel has a tall job ahead of it. Many naysayers still criticize SOX, but in fact, it has brought some real problems to light. At the end of the day, integrity as a corporate virture to be admired is the real solution, but SOX helps move the important goals of shareholder protection and disclosure of information another step forward...
For the full news release about Nortel see:
http://home.businesswire.com/portal/site/google/index.jsp?ndmViewId=news_view&newsId=20040819005227&newsLang=en
For more information about the Sarbanes-Oxley Compliance Playbook (tm) see www.issuescentral.com
The audit committee at Nortel has a tall job ahead of it. Many naysayers still criticize SOX, but in fact, it has brought some real problems to light. At the end of the day, integrity as a corporate virture to be admired is the real solution, but SOX helps move the important goals of shareholder protection and disclosure of information another step forward...
For the full news release about Nortel see:
http://home.businesswire.com/portal/site/google/index.jsp?ndmViewId=news_view&newsId=20040819005227&newsLang=en
For more information about the Sarbanes-Oxley Compliance Playbook (tm) see www.issuescentral.com
August 18, 2004
The rest of the world quickens pace on governance
Many doomsayers warned that Sarbanes-Oxley of 2002 spelled the end of the US markets. The laws were said to be "draconian". But not so as other markets across the world is following suit.
An interesting item from www.lawfuel.com says this about the topic...
“Yet as 2004 unfolds, these concerns for the pace of corporate governance reform globally seem unfounded. The momentum of corporate governance reform has quickened and initiatives for reform, learning from American experience, touch almost every country in which shares are publicly traded.”
See the complete article at: http://www.lawfuel.com/index.php?page=press_releases&handler=focus&pressreleaseid=1446&category=&return=list-publications&sortby=timestamp&screen=1
For more information on Issues Central Compliance Playbook (tm) see www.issuescentral.com
An interesting item from www.lawfuel.com says this about the topic...
“Yet as 2004 unfolds, these concerns for the pace of corporate governance reform globally seem unfounded. The momentum of corporate governance reform has quickened and initiatives for reform, learning from American experience, touch almost every country in which shares are publicly traded.”
See the complete article at: http://www.lawfuel.com/index.php?page=press_releases&handler=focus&pressreleaseid=1446&category=&return=list-publications&sortby=timestamp&screen=1
For more information on Issues Central Compliance Playbook (tm) see www.issuescentral.com
Companies still adjusting to electronic documentation
We are seeing a tremendous amount of documentation of key financial processes being developed without the aid of tools to help organize the information or consistently document processes. Companies will have mountains of disparate electronic "documents" after the first filing period. Managing this and taking being able to leverage it for the next round of 404 reviews will be a challenge for most companies. The sheer volume of data generated even in a smaller company can be staggering.
An interesting article by Information Technology Solution Providers Alliance (ITSPA) has this to say on the topic:
"The bottom line for SMBs (Small and Medium Businesses) is that the nature of business documentation has changed from paper to electronic and most companies are still adjusting," said Levi. "For this reason, SMBs should consider looking at total technology solutions that involve not just buying compliance software but also upgrading to new and secure office technology"
For the complete article, see http://home.businesswire.com/portal/site/google/index.jsp?ndmViewId=news_view&newsId=20040817005046&newsLang=en
For more information about Issues Central www.issuescentral.com
An interesting article by Information Technology Solution Providers Alliance (ITSPA) has this to say on the topic:
"The bottom line for SMBs (Small and Medium Businesses) is that the nature of business documentation has changed from paper to electronic and most companies are still adjusting," said Levi. "For this reason, SMBs should consider looking at total technology solutions that involve not just buying compliance software but also upgrading to new and secure office technology"
For the complete article, see http://home.businesswire.com/portal/site/google/index.jsp?ndmViewId=news_view&newsId=20040817005046&newsLang=en
For more information about Issues Central www.issuescentral.com
August 16, 2004
Time Shrinking, Costs Rising
The time to get Sarbanes-Oxley projects well on their way to completion is on every CFO's mind. Since the legislation was first passed in August of 2002, many changes have been made. In March of 2004, the PCAOB made some pronouncements that helped define how Section 404 review should be undertaken.
An interesting article gives some insight on costs rising on Section 404 reviews...
In July 2004, FEI surveyed 224 public companies with average revenues of $2.5 billion to gauge Section 404 compliance cost estimates. Results showed the total cost of compliance is now estimated at $3.14 million*, or 62% more than the $1.93 million estimate identified in FEI's January 2004 survey. The companies surveyed expect to pay their auditors $823,200 in fees for attestation of their internal controls, in addition to the annual audit fees. This compares to the $590,100 companies expected auditors would charge for attestation in January 2004. The survey was conducted the week of July 19, and distributed to 3,088 companies, and drew a response rate of 13.8 percent.
Accountingweb has the complete article.
For more about Issues Central, see www.issuescentral.com
An interesting article gives some insight on costs rising on Section 404 reviews...
In July 2004, FEI surveyed 224 public companies with average revenues of $2.5 billion to gauge Section 404 compliance cost estimates. Results showed the total cost of compliance is now estimated at $3.14 million*, or 62% more than the $1.93 million estimate identified in FEI's January 2004 survey. The companies surveyed expect to pay their auditors $823,200 in fees for attestation of their internal controls, in addition to the annual audit fees. This compares to the $590,100 companies expected auditors would charge for attestation in January 2004. The survey was conducted the week of July 19, and distributed to 3,088 companies, and drew a response rate of 13.8 percent.
Accountingweb has the complete article.
For more about Issues Central, see www.issuescentral.com
August 10, 2004
Whistleblowers active under Sarbanes-Oxley Act
While many are simply focusing on Section 404 (Internal Controls) in the Sarbanes-Oxley Act, there are other signs that the Act is shaping behavior in the financial markets. The SEC is receiving 1300 complaints per day on its website. This has increased since the Act was released.
See the complete stats at: http://www.cfo.com/article/1,5309,14928T2501,00.html?f=home_todayinfinance
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See the complete stats at: http://www.cfo.com/article/1,5309,14928T2501,00.html?f=home_todayinfinance
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