Compliance Blog

Amazingly with all the reporting about Sarbanes-Oxley, there are many executives who do not seem to understand their roles and what needs to be done to comply. It would seem that you would have to have been hidden away on a desert island not to have understood the implications and requirements of Section 404/Internal Control Assertions. But here you see in this excerpt, exactly that:

"BURLINGTON, Mass. --(Business Wire)-- Sept. 30, 2004 -- Findings Suggest a Significant Percentage of Companies Likely to Fail 2004 Audit Because of Lack of Awareness A recent survey by Obian, Inc. found that an astounding 93% of chief information officers and other senior IT executives were unaware of their information technology control assessment responsibilities as mandated under Section 404 of the Sarbanes-Oxley Act - a finding that suggests a significant percentage of companies will fail their 2004 corporate governance audit." See the complete article at: http://www.tmcnet.com/usubmit/2004/Sep/1078537.htm

If your company needs help effectively, rapidly and affordably complying with Sarbanes-Oxley Section 404 and the rest of the Act, see www.issuescentral.com or call (416) 977-1496 for more information

US Regulators are using all of their powers to arrest and convict anyone associated with the most embarrassing case in recent times - the Enron collapse. Regulators are using powers under this case to extradite foreign nationals. The targets of these investigations are crying foul. But they sure were there when they thought they could make a lot of money. Now it is time to pay the piper...

See the excerpt from an article on this topic:
"Three British bankers facing extradition to the United States on Enron Corp.-related fraud charges accused the U.S. government of using the proceedings as a "weapon" to pressure the men into implicating senior Enron officials in the alleged crimes.
David Bermingham, Gary Mulgrew and Giles Darby were indicted on seven counts of wire fraud by a Houston court in 2002. U.S. federal prosecutors claim the men used an Enron off-the-books partnership to defraud their employer, Greenwich NatWest, now part of Royal Bank of Scotland PLC, of $7.1-million (U.S.). They deny the charges and are fighting extradition to Texas." For the complete article click here:

To get more information on the Issues Central Sarbanes-Oxley Compliance Playbook(tm) see www.issuescentral.com or (416) 977-1496.

We applaud the SEC for opening the discussion around making Financial Reporting information tagged and more easily accessible as data. This takes an important step forward with increases in disclosure and transparency and now attempts to make the volume of information easier to analyze and increases its value in general.


See the excerpt from the SEC notice here:
"SEC Proposes Rule to Establish Voluntary Program for Reporting Financial Information on Edgar Using XBRL
Commission Also Solicits Comments on Benefits of Tagged Data and XBRL
FOR IMMEDIATE RELEASE2004-138
Washington, D.C., Sept, 27, 2004 - As part of its initiative to assess the benefits of tagged data and its potential for improving the timeliness, accuracy and analysis of financial disclosure in Commission filings, the Securities and Exchange Commission issued a proposing release today to establish a voluntary program allowing registrants to file supplemental financial information using eXtensible Business Reporting Language (XBRL). Registrants would be able to voluntarily furnish XBRL data in an exhibit to specified EDGAR filings under the Securities Exchange Act of 1934 and the Investment Company Act of 1940. This program would begin with the 2004 calendar year-end reporting season. The proposal will be open for public comment for a 30 day period following its publication in the Federal Register."

For the complete proposed rule, see: http://www.sec.gov/rules/proposed/33-8496.htm

To see how Issues Central Sarbanes-Oxley Compliance Playbook(tm) can help streamline your required reporting, check out www.issuescentral.com

Even the Chinese government is realizing that governance changes are necessary to keep up in this aggressive an ever changing world. When you want the world to do business with you and trust you, you must adopt some of their rules.

See the excerpt from: chinadaily.com
"Enhancing governance capability important, urgent
The CPC has conceded that it needs to enhance governance capability to consolidate its ruling status and meet domestic and global challenges.
It was history and the people that chose our Party as the ruling party," says the document. "And it was to meet the requirements of the times and the people that the Party should enhance its governance capability."
See the complete article at: http://www.chinadaily.com.cn/english/doc/2004-09/27/content_378161.htm

For more information on how Issues Central Sarbanes-Oxley Compliance Playbook(tm) can help your organization manage its Sarbanes-Oxley challenges, see www.issuescentral.com

It seems that every continent is getting the "governance bug"! Every country is beginning to realize that foreign investment will be more impressed by transparency and disclosure. The key to competing with other countries for investment is to provide regulations that assure that investments are safe. This is a great trend to see. Stay tuned for more "joiners" in this trend in the future.

An excerpt from an article addressing this continuing trend is shown here:
"ADDIS ABABA, Sept. 24 (Xinhuanet) -- The Fourth African Development Forum (ADF) is scheduled for October in Addis Ababa with the theme of "Governance for a Progressing Africa," according to local media on Friday.
The forum, to be held on Oct. 11-15, is being co-sponsored by the African Development Bank and the African Union.
The forum will discuss and examine ways of improving governance in Africa and make concrete recommendations on mechanisms for instituting and monitoring good governance"

See the complete article at: http://news.xinhuanet.com/english/2004-09/24/content_2016805.htm

For complete information on Issues Central Sarbanes-Oxley Compliance Playbook(tm), see www.issuescentral.com

The San Diego Employees Retirement Systems (SDCERS) really needs a dose of SOX. What a disgrace that publicly held companies are vilified but yet those organizations managing pension funds just run "open loop" without controls. Let's face it, this is not the first instance of this. If SOX is good enough for the greatest financial markets in the world, maybe it is good enough for any organization who has a idiciuary responsiblity.

See this excerpt from an article about the SDCERS woes:
Fitch Places $307MM San Diego, CA Debt on Rating Watch Negative
Sept. 23, 2004--Fitch places San Diego, CA's 'AA' rating on $52.2 million in general obligation bonds and 'AA-' rating on $254.6 million in bonds backed by city lease rental payments on Rating Watch Negative. The action reflects concern over deficiencies in decision-making and management of the city's pension system and related disclosure, as detailed in a report released last week. The issuers and issues affected are detailed below.

Fitch's viewpoint stems from a report done by the law firm Vinson & Elkins L.L.P and released last week. Earlier this year, the city hired the firm to review the by then well publicized problems in the San Diego Employees Retirement Systems (SDCERS) and related securities disclosure. Fitch believes that the city's credit quality could deteriorate further if the practices that enabled the granting of costly pension benefits without adequate and timely funding continue. Fitch is troubled by many findings in the report, particularly the number and levels of individuals and entities agreeing or acquiescing to poor financial planning and inadequate disclosure, as it is characterized in the report. Fitch's concern and Rating Watch action is in keeping with its emphasis on effective management as a key credit quality component."

For the complete article see: http://home.businesswire.com/portal/site/google/index.jsp?ndmViewId=news_view&newsId=20040923005444&newsLang=en

To see complete information on Issues Central Sarbanes-Oxley Compliance Playbook(tm) see www.issuescentral.com

Sarbanes-Oxley provisions such as transparency and disclosure are such basic and undisputable principals, that now we see another government agency (EHS - US Government Environmental Health & Safety Agency) begin to audit and review their constituents with a Sarbanes-Oxley lens. Without independence and transparency, all other information is well, suspect!

See this excerpt on this topic:
"Historically, EHS auditors have been charged with assessing EHS information for purposes of compliance, due diligence, risk assessment, and voluntary standards such as ISO 14001, an environmental management certification. The underlying purpose of these audits is expanding under Sarbanes-Oxley. SOX places greater emphasis on ensuring that disclosures are accurate and complete in all material aspects. SOX also requires that processes are in place to bring all relevant information to the attention of senior management. "
Find the complete article at: http://www.csrwire.com/sfarticle.cgi?id=1520

For complete information on Issues Central Sarbanes-Oxley Compliance Playbook(tm) see www.issuescentral.com

It seems that European companies are far complying with the Sarbanes-Oxley provisions. Sounds like the SEC is going to be busy next year when these companies begin their filings. Yes, Section 404 is real work, but there are benefits beyond the legislation if the project is conducted well and thorougly.

See the article from this topic:
"European companies are taking a faltering approach to Sarbanes-Oxley
Few have made significant inroads towards meeting complianceThe Hague, Netherlands – September 20th 2004. A.R.C. Morgan have today released the findings of their European Companies Sarbanes-Oxley Benchmarking survey – the survey indicates that more than 69% of European companies interviewed are only at the very early stages of planning their Sarbanes-Oxley section 404 project. The survey also reveals that European companies are not paying heed to the whistleblower provision of the Sarbanes-Oxley Act. The results of this Benchmarking Survey should cause alarm within Board Rooms of those European companies that must comply with the Sarbanes-Oxley Act. "
See the complete article at: http://www.tmcnet.com/usubmit/2004/Sep/1074507.htm

For information on how your company can rapidly and effectively comply with Sarbanes-Oxley see Issues Central Sarbanes-Oxley Compliance Playbook(tm) at www.issuescentral.com

Money pours into Alabama Supreme Court races. Everywhere we look, special interests attempt to influence politics. Disclosure certainly helps keep a bright light to help assure that the straight and narrow road will be followed, but at what point do we just say no to special interest contributions for all political offices? Attempts at the federal level to curb this activity have left loopholes for soft money to still be used. It is disheartening to believe that everything is controlled by special interests and their big money, but it sure looks that way.

This article highlights this very issue:
"MONTGOMERY — Supreme Court judges are elected to make fair and impartial rulings and hear every case with an open mind.
But record breaking amounts of money that are pouring into Alabama’s race this year are casting doubt on that basic duty, judicial observers say.
So far this year, candidates running for three court seats have raised at least $3.2 million, according to financial disclosure forms. That number is expected to climb far higher before November based on fundraising totals from June, the last time they were required."

For the complete article see: http://www.annistonstar.com/news/2004/as-state-0920-asieckmann-4i20a2336.htm

See complete information on Issues Central's Sarbanes-Oxley Compliance Playbook(tm) at www.issuescentral.com

When Sarbanes-Oxley was enacted in 2002, the Section 307 included a "noisy withdrawal" provision. This was a real concern to attorneys who deal with public companies. As of August of 2003, this provision has been removed much to attorneys' relief. So while training is necessary for attorneys to understand the Sarbanes-Oxley provisions, the effect has been much less on them than it has for their clients.

See an excerpt from an article at www.bizjournals.com:
"When the SEC's final rules became effective Aug. 5, 2003, to the relief of many attorneys, they did not contain the "noisy withdrawal" provision. More than a year later, they've become part of the daily grind for local corporate attorneys."
For the complete article see: http://www.bizjournals.com/moneycenter/story.html?id=3240

To find out more about Issues Central Sarbanes-Oxley Compliance Playbook(tm) see www.issuescentral.com

Today, a Russian Finance official announced the interesting news that corporate governance regulations are under consideration in Russia. This should be good news for those considering investment in Russia. Does this mean that changes in government dealings with private companies are subject to review as well?

See this excerpt from the news release from www.rbcnews.com :
"Monetary official on corporate governance in Russia
RBC, 16.09.2004, Moscow 16:55:37.Head of the Federal Service for Financial Markets Oleg Vyugin has proposed to create a system of assessing corporate governance practices in Russia. As he told journalists commenting on the program of improving corporate governance practices in Russia worked out in cooperation with the European Union, this will make it possible for investors to assess and compare Russian companies taking into account internationally approved standards.
Vyugin considers it reasonable to create a system of ratings assigned to Russian companies after the assessment of the corporate governance level. The decision to get a rating should be voluntary, the head of the Federal Service for Financial Markets emphasized. "
See the complete article: http://www.rbcnews.com/free/20040916165537.shtml

For complete information on Issues Sarbanes-Oxley Compliance Playbook(tm) www.issuescentral.com

A recent survey of private companies has revealed that they are impacted by the Sarbanes-Oxley Act provisions. Many CEO's say they have elected to enact many of the provisions. It is always positive to see governance done voluntarily-to avoid problems.

Here is some data on this survey from an article by Foley & Lardner LLP:
"Many private organizations planned to adopt or have already adopted several measures in response to the Sarbanes-Oxley Act:

1. CEO/CFO financial statement attestation (44%)
2. Establishment of whistle-blower procedures (40%)
3. Board approval of non-audit services by auditors (43%)
4. Adoption of corporate governance policy guidelines (40%)"

For the complete article see: http://www.mondaq.com/i_article.asp_Q_articleid_E_28359

For information on Issues Central Sarbanes-Oxley Compliance Playbook see www.issuescentral.com

A recent survey of private companies has revealed that they are impacted by the Sarbanes-Oxley Act provisions. Many CEO's say they have elected to enact many of the provisions. It is always positive to see governance done voluntarily-to avoid problems.

Here is some data on this survey from an article by Foley & Lardner LLP:
"Many private organizations planned to adopt or have already adopted several measures in response to the Sarbanes-Oxley Act:

1. CEO/CFO financial statement attestation (44%)
2. Establishment of whistle-blower procedures (40%)
3. Board approval of non-audit services by auditors (43%)
4. Adoption of corporate governance policy guidelines (40%)"

For the complete article see: http://www.mondaq.com/i_article.asp_Q_articleid_E_28359

For information on Issues Central Sarbanes-Oxley Compliance Playbook see www.issuescentral.com

An interview with the head of the PCAOB (Public Company Accounting Oversight Board), William J. McDonough, by CPA2Biz sheds some light on the types of investigations and reviews that public company audit firms will now be experiencing. It is as extensive as those that are performed for the auditors' clients. This is all thanks to Sarbanes-Oxley that established this oversight board.

An excerpt from the interview is shown here:
Part of the work will be a very intense look at the overall management and conduct of the firm, "what we call "tone at the top." Are they getting the message across that audit is their most important product? Are good auditors being compensated for being good auditors — not for bringing in collateral business, the cancer that destroyed Arthur Andersen? We will also be looking at individual audit engagements. Last year we examined 16 in each Big Four firm. This year we will be doing several hundred each. The reviews are very thorough. We review the work papers, interview the engagement partner, the partner that reviewed the engagement partner's work, and then talk with people involved in the audit, to see whether this message of absolutely high-quality audits is being carried to the rank and file."

See the complete article at: https://www.cpa2biz.com/News/Selected+Features/The+Enforcer.htm

For more information on Issues Central Sarbanes-Oxley Compliance Playbook(tm) see: www.issuescentral.com

This is a real blow to the free market. How did this happen? Anti-trust laws have been in place for many years. There is so much focus on how Microsoft is a monopoly. But Ellison definitely wants to rule the world! The plot definitely thickens. Stay tuned for more on what the European Commission has to say on this one. Both companies are obviously global, so US courts are not the only one who get to have an opinion on this one...


"While the ruling is a victory for Oracle and its combative CEO Larry Ellison, the business software developer still faces a poison pill and a possible appeal from the Justice Department, as well as other court and regulatory hurdles.

The European Commission has opened its own review of the takeover bid. Also, a jury trial is scheduled to begin Nov. 1 in California state court in a suit filed by PeopleSoft seeking damages from Oracle for hurting its business." For the full story see: http://cbs.marketwatch.com/news/story.asp?guid=%7BD38D6F0A%2D2638%2D4751%2DA4BD%2D56DD902789A2%7D&siteid=google

For information on Issues Central Sarbanes-Oxley Compliance Playbook (tm) see www.issuescentral.com

He claims he is innocent of obstructing justice. Only Frank Quattrone knows for sure. But one thing is certain these days: Anything that smells like fraud will catch the eye of regulatory authorities. Many more will probably be hitting the court rooms as we see once high profile Wall Street figures go to jail.

This excerpt from newsday.com highlights this sentence handed down.
"Frank Quattrone, who rose to investment banking stardom during the dot.com boom, was sentenced to 18 months in a federal prison camp in Lompoc, Calif., yesterday after he was convicted of obstructing a government inquiry by directing employees to destroy e-mails and documents sought by prosecutors." See the complete article at: http://www.newsday.com/business/ny-bzquat093960236sep09,0,6568423.story?coll=ny-business-big-pix

For more information about Issues Central Sarbanes-Oxley Compliance Playbook(tm) see www.issuescentral.com

Efforts at leading the world in governance and compliance are being noticed around the world. The US seems to take on the tough jobs as the rest of the world watches. No where is this more noticeable in taking the courageous steps in enacting Sarbanes-Oxley legislation. This leads to more faith in US markets and companies due to more disclosure and transparency.

"U.S. tops in corporate governance ranking
OTTAWA - U.S. companies have surpassed Canadian firms to win the top spot in an international ranking of corporate governance practices that provide shareholders with transparency into corporate behaviour, including accounting, auditing, and executive compensation policies and practices. " from the National Post online site.

See the complete article at the National Post site at: http://www.canada.com/national/nationalpost/financialpost/story.html?id=75e5fdb7-6914-4fed-826f-624e9d307a8a

For more information on Issues Central Sarbanes-Oxley Compliance Playbook(tm) see www.issuescentral.com

Part of preparing for a marathon - Section 404 - is starting to train way in advance, carefully mapping out each "mile" or process in the race. This assures that you/your company are prepared with the tools and habits to finish the race successfully. This also allows practices and habits to be in place for "races to come" - future filings.

Projects for management of Sarbanes-Oxley compliance need to be put into place sooner rather than later. This legislation is here to stay and is recurring on the reporting requirements. To put off software infrastructure until...is not a solution but only increases the cost and effort in complying.

For an excerpt from an article from accountancyage.com on this topic:
"IT departments should not become complacent in complying with the Sarbanes Oxley Act despite the recent postponement in reporting times requirements, warn analysts" For the complete article see: http://www.accountancyage.com/News/1138065

Complete information on Issues Central Sarbanes-Oxley Compliance Playbook(tm) see www.issuescentral.com

It is absolutely amazing that companies are just spending huge amounts of money for professional services to perform their first year of SOX 404 compliance work. This means that in the second year, they have no internal knowledge of the project and data. Also, they have no infrastructure to manage and revise the data. This is a really big expenditure of cash without much long term benefit.

An excerpt from an article on newsfactor.com discusses this survey:
"One of the reasons internal personnel may not understand the implications of Sarbox is that many companies are relying heavily on external consultants to identify and execute needed changes in their business processes" See the complete story at this link:
http://www.newsfactor.com/story.xhtml?story_title=Big-Wigs-Outsource-Sarbox-Compliance&story_id=26724&category=entcmpt

For more information on Issues Central's Sarbanes-Oxley Compliance Playbook(tm) see www.issuescentral.com

Depending on the approach, companies can view Section 404 as a burden or a mandate to improve and "shape-up" many key processes that need some enhancement. If you are going to do "surgery" on your processes anyway, why not take the approach that you can really benefit instead of just doing the bare minium with no added value to the organization. See this article from Accountancy Age.com for an interesting viewpoint on this much debated topic.

"... as they work through the task of carrying out a comprehensive documentation of the organisation's key processes and internal controls, companies will find they are able to streamline or automate a number of activities through the implementation of new or bolt-on financial software systems. This, in turn, will lead to further efficiency savings, all of which can have a positive impact on the bottom line." See the complete article at: http://www.accountancyage.com/Features/1138037

For more information on Issues Central Sarbanes-Oxley Compliance Playbook(tm) at www.issuescentral.com

Just when people are complaining about changes in governance and compliance regulations as being unnecessary, out comes the bombshell 500 page report on the exploits of Conrad Black. Conrad Black's arrogance is legendary. His DAY in court may last forever by the time this one gets finished!

For the story on Hollinger and Conrad Black see: http://www.canada.com/calgary/calgaryherald/news/story.html?id=a051764a-7865-489a-ba01-d7ebd1f99385

For complete information on Issues Central Sarbanes-Oxley Compliance Playbook(tm) see www.issuescentral.com