Compliance Blog

When you think about it, it is rather a rhetorical question: Would you, as a CEO or CFO, want to make sure that your company had adequate internal controls to assure assets were safeguarded and that your operations actually worked as advertised? Or not? So it is great to see that the courts upheld the first challenge against the legislation with the HealthSouth ruling. Some things are vague such as managing people but does that make them impossible or something you should not do?

Come on now! Let's quit using the courts to try to dodge our responsibilities. Let's just do the right thing. Let's get back to good ethics in business.

For an excerpt on the first test, see here:
"In the first court test of the Sarbanes-Oxley Act - which requires top executives of public corporations to vouch for the financial reports of their companies - U.S. District Judge Karon O. Bowdre disagreed with Scrushy's argument that the act is unconstitutionally vague and should not be part of the indictment accusing him of a massive fraud at HealthSouth."
For the complete article, click here.

To learn how your organization can not only comply with Sarbanes-Oxley but receive operational improvements as part of the process, see www.issuescentral.com or call (416) 977-1496.

We all hear every day the work and money that is being spent to comply with Sarbanes-Oxley. But is it all just kept in a bunch of spreadsheets or is it being "deployed" to the masses in affected companies? If not, is there really any change going on?

An excerpt of an article on this topic is here:
"U.S. Workers and Investors Largely Unaware of Sarbanes-Oxley ActMonday November 22, 6:00 am ET
Hudson Survey Shows Limited Impact on Investor Confidence Only Accounting and Finance Workers are Affected to Date
NEW YORK, Nov. 22 /PRNewswire-FirstCall/ -- Eighty percent of U.S. workers and 76 percent of employed investors have never heard of the Sarbanes-Oxley Act of 2002, according to a Hudson survey measuring its impact in the workplace. As the first compliance deadline approaches in December, only nine percent of workers say they have been asked to do something differently in their jobs as a result of the Sarbanes-Oxley Act."
For the complete article, click here.

To learn more about how to comply with Sarbanes-Oxley AND deploy it to your company for real adoption, see www.issuescentral.com to lear more about Sarbanes-Oxley Compliance Playbookt(tm).

Some globalization is positive when it leads to transparency and disclosure. It is interesting to see this trend in countries who traditionally do not disclose much. When you are on the world stage, you have to play to a different audience. Your behavior is judged with a different standard. This leads to higher standards for all.

An excerpt from an article on this topic is here:
"Corporate governance has over the years become common parlance amongst corporates globally. It is a concept, which saw its birth in the West, but has gained increased significance in the East. The 1997 Asian Financial Crisis is often cited as a catalyst for bringing corporate governance to the foreground, but really the international investor dollar brought about as a consequence of Globalisation has seen increasing efforts amongst Asian countries to take steps, occasionally drastic ones, to ensure enhanced corporate governance." For the entire article, click here.

For more information on how your company can effectively and affordably comply with Sarbanes-Oxley, see www.issuescentral.com to learn more about the Sarbanes-Oxley Compliance Playbook(tm).

Better to report your flaws yourself early and often rather than your CPA firm or worse yet the SEC do the internal control detective work. With the first filing date for Section 404 now upon us, companies are going to give strong consideration to "fessing up" about internal control flaws now.

Why? Better you report your own flaws rather than wait and have someone else find them. Find them, fix them and report it. The new standard in corporate governance...

An article which highlights this probable trend is here:
"In an announcement last Wednesday, Atlanta-based SunTrust said that its internal audit found "numerous errors in the loan loss allowance calculations for the first and second quarters, including data, model and formulaic errors," that were not immediately investigated and corrected. Also found were problems with the implementation of a new accounting allowance framework in the first quarter, which resulted in inadequate internal control procedures, insufficient validation and testing, and a failure to detect errors in the allowance calculation."
For the complete article, click here.

To learn more how your company can rapidly and affordably comply with Sarbanes-Oxley, see www.issuescentral.com today. Accelerate your project and decrease your cost. Find out more about Issues Central Sarbanes-Oxley Compliance Playbook(tm) or call (416) 977-1496.

It is finally here, one year later than originally enacted, the first filing deadline for companies with fiscal periods Nov 15th and a market cap in excess of $75 million. Technically, they have 60 days to do the filing from the end of their fiscal year. So early in the year, we should see some of these filings.

To see some thoughts on what might be to come. see this excerpt,
"At an October meeting between the accounting powerhouse PricewaterhouseCoopers and representatives from more than 40 financial institutions, some 40 percent of attendees said their firms might be on track to report a "material weakness" in their controls.
"If you believe these findings, it's clear that we could see a large number of significant deficiencies being reported," PricewaterhouseCoopers Chairman David Nally said in a speech last Thursday. He did not mention any companies by name.
Firms with fiscal years ending after Nov. 15, including financial giants like Morgan Stanley (MWD: news, chart, profile), Goldman Sachs (GS: news, chart, profile), Bear Stearns (BSC: news, chart, profile) and Lehman Brothers (LEH: news, chart, profile) are now required to prove in their annual reports that they've tested and documented their sales, assets and liabilities in a way that complies with the sweeping Sarbanes-Oxley law of 2002."

For the complete article, click here.

To see a market leading set of tools and content to help your comply rapidly and affordably, see www.issuescentral.com or call (416) 977-1496.

Finding themselves with lots of business from clients, due to Sarbanes-Oxley, CPA firms are stretched thin. This is showing up in the perceptions from their clients. Pressure is high and so are expectations. Firms need to be selective on the work they accept with their clients. Clients have to have responsibility in the long term anyway.

For an excerpt on an article on this topic:
"The study finds a significant amount of angst among audit committee chairs and CFOs in the industry. Top management is concerned about the costs of implementing the extensive requirements associated with Sarbanes-Oxley compliance. Some auditors feel they are being stretched too thin because of additional audit requirements, which are impacting service levels. Also, audit committee chairs are feeling the pressure of increased accountability of the required financial reporting process. The results of this are low accounting firm performance levels compared to other business-to-business studies, and a decline in the confidence level of the accounting profession.
Furthermore, almost 9 out of 10 CFOs say the costs of implementing the new rules and procedural requirements of Sarbanes-Oxley are greater than the benefits of those changes. Confidence is also particularly low among CFOs, with just 44 percent expressing high levels of confidence in the accounting industry. "
For the complete article, click here.

For rapid affordable Sarbanes-Oxley compliance, see www.issuescentral.com for information on Sarbanes-Oxley Compliance Playbook(tm) or call (416) 977-1496.

In 1986, I was elected to the White House Conference on Small Business. This conference uses parlimentary rules and many conventions from the US congress. The purpose of the conference is so that small business can have a voice in priorities for business. As we know, huge companies have money to lobby, small business just has sweat equity.

The conference was about a week. While I do not remember all of the items we passed as topics for the Reagan administration to consider, I do remember one: Tort Reform. This is so critical to our country. It heavily influences business, personal behavior and the future of our country, it is hard to comprehend.

Companies out source jobs due to high labor costs but also to avoid the legal costs rampant in the US. This crippling our economy and is a real brake on productivity and innovation. If the Bush administration does not use their "political capital" to fix this one, it may never get done. The US has several advantages in its economy, not the least of which is innovation. We do it the best in the world. This is because it is ok to fail and try again. Massive malpractice awards curb this edge.

George, you were elected with a majority. Give everyone in the US a reason to applaud you. Pass a real tort reform bill. You are one of the few people elected with the will, ability and focus to get this done. That will be a great legacy.

The impact of Sarbanes-Oxley is being felt even in sectors that do not have to comply. Non-profits are beginning to find out about the Act, assuming that at some point they will have to comply. This is probably a good assumption, since many non-profits are large and they definitely have had their issues with governance in recent times.

For an excerpt on an article on this topic, see here.
"Interest in a 5-part internet seminar series on Sarbanes Oxley and IRS requirements for non-profit organizations continues to grow among executives of nonprofit organizations as they grapple with the complex realities of new regulations." For the complete article, click here.

To help your organization comply with Sarbanes-Oxley, see www.issuescentral.com to learn more about Compliance Playbook(tm).

If publicly held companies had continued reviewing internal contrals as they used to, 25 years ago, the expense being absorbed now would be nil. However, with the desire to reduce audit fees, risk based auditing came into fashion. Internal Controls were not reviewed and really became "immaterial". Therefore, we are paying the price for years on neglect in this important area.

An excerpt on internal control review is here:
"Section 404 is such an important part of restoring investor confidence that it is worth the cost,'' McDonough, 70, said at an August press conference in Washington.
The board will audit the work of the biggest four accounting firms every year and examine the performance of smaller auditors on a rotating basis. That surveillance replaced a system of ``peer review'' in which the firms monitored one another. The law also gave board audit committees, instead of management, the power to hire and fire auditors.
``The law has put accounting in a spotlight,'' says Charles Niemeier, a member of the oversight board.
Investor confidence was shaken by the scandals at Enron, WorldCom and Tyco, which the accounting firms themselves failed to uncover and in some cases encouraged."
For the complete article, click here.

To reduce costs and effectively comply with Sarbanes-Oxley, see www.issuescentral.com for more information.

This is it! The climax of the $1 billion spent for this presidential election. Today is the day the world will watch and judge the United States.

Americans are in an interesting situation with the world. Anti-Bush sentiment is so high abroad that it reaches hysterical proportions. To my fellow world citizens, please take note. Before President George w. Bush came into office, you did not like us then either. In my travels around the world over the last 25 years, anti-Americanism has grown directly with the dominance of the US. George just has a style that lights people up either way.

Unlike Bill Clinton, George says what he is thinking, not what YOU want to hear.

So world what would you have us do? Vote out the horrible George? What happens if Kerry wins and he is everything he appears to be? Bill Clinton without the charisma and the keen politician's mind? What happens then? What if the world becomes even more dangerous?

The answer is clear: the US is to blame. No matter how things go, the US is to blame. So as a very patriotic ex-pat American, I say the US has to vote its heart. It has to be the leader that it is and listen to the world, but realize they hold you to an expectation you will never win.

Americans are very generous and optimistic people. Do not let the rest of the world with their cynicism and their own baggage and agendas, influence what you know is right. You will never please the world anyway. History will be the judge.

Vote your heart. Vote for something! Vote for someone. Do not vote against someone/something. History has proven over and over, this can be disastrous.

Besides, if the rest of the world is so smart, so brilliant, why do their countries have so many problems? The US is not to blame for everything. Do not let the cacophony of negativity get you down. The world loves to see the big dog down. Unfortunate human nature.

However, the US has to lead! There is no one else. This is always a lonely role and there is always criticism. Rarely, do leaders get credit. Lead from the heart and with a statesperson's instincts. That is who you should listen to. Make your decisions with a positive, generous view.

Vote! Lead! It is your time in history. Do it well. Do it with Grace.

Both the Washington Times and the LA Times today reported large numbers of frauds in the funds useage in contracts in Iraq. There are 272 reports of fraud and 113 ongoing criminal investigations. It is one thing to dedicate a huge amount of funds to Iraq, it is entirely another thing to have it pilfered right from the pockets of the American people.

These warlords could teach the execs at Enron a thing or two!

To learn more about how to effectively and affordably manage your Sarbanes-Oxley compliance efforts, see www.issuescentral.com for more information or call (416) 977-1496 to find out more.