Section 404 Free guide to Sarbanes-Oxley

Tue, 15 Apr 2008 06:59:58 -0400

As you well know, vendor marketing tends to be ubiquitous. Most of you probably are skeptical when you hear that something is free from a vendor. But Protiviti's guide to Sarbanes-Oxley's Section 404, the recently released fourth edition, may prove to be a handy resource. It has been updated to account for new SEC timetables, large company vs. small company differences, two major roundtables, and of course AS5. You need to be knowledgeable obviously, with answers at your fingertips. Sounding smart is part of the game. Release

Survey on AS5: Have Sarbox process gains peaked?

Tue, 11 Mar 2008 07:59:59 -0400

A new survey from Compliance Week has found that many companies have been paring back a number of key controls significantly. Almost 15 percent say they have cut key controls by 60 to 80 percent, which is what AS5 was supposed to do. While this suggests a more streamlined process--a good thing--not all think that this will yield a lot of procedural gains and savings. The number of controls that can be eliminated from here, it seems, will be harder to reduce. So it seems like the progress of AS5 may well be limited, though it's still an improvement over AS2.

For more:
- here's the survey results

Related Articles:
A litmus test for AS5's value. Article
Can AS5 really be enforced? Article
Will AS5 finally ease the tense standoff? Article
Finally, new Sarbox rules are approved. Article

CFOs: Sarbox benefits plentiful, but risks still high

Tue, 04 Mar 2008 06:59:59 -0500

We've heard a lot of people voice the view that Sarbanes-Oxley compliance done well can yield lots of strategic benefits--if only as a way to slice and dice to support strategic ends. A new survey by BDO Seidman confirms that most CFOs believe Sarbox compliance activity has led to improved processes in general. Interestingly enough, a majority also believe that "risk-taking" has not been curtailed. It may be that the risks Sarbox attempts to control stem from human impulses--rogues, mainly. If they are motivated, they can circumvent controls. Still, at least there are other benefits.

For more:
- here's the release (scroll down for the 404 section)

Related Articles:
Do you need a formal risk management strategy? Article
Compliance readiness--A way of life. Article
Tools and tips for enterprise risk management. Article

Another unintended consequence of Sarbanes Oxley

Tue, 15 Jan 2008 06:59:59 -0500

The Lord & Benoit report noted above makes much of what it calls "The Unintended Paradox." Sarbanes Oxley of course was meant to instill confidence in the financial reports of public companies. It has largely succeeded at the large company level. As for smaller companies, the critical Section 404 requirements, notably the requirement for auditor attestation of internal controls, has been repeatedly delayed. Meanwhile, nonpublic companies are now required by the AICPA to have auditors "evaluate the design of controls relevant to the financial statements and determine whether or not the control has been implemented." 404-like to say the least. So for the moment, the control standards for nonpublic small companies are more rigorous than for public companies. Imagine that.

For more:
- see the report (reg. req.)

More on small accounting companies and Sarbox

Tue, 11 Sep 2007 06:59:59 -0400

There has been a lot of ink spilled on small companies and Sarbox. What about small accounting firms? You would think that they would find more work as more small companies gear up to comply, often for the first time. So far, the benefits seem to have fallen to larger firms. According to the most recent Rosenberg MAP Survey, firms with over $10 million in net fees grew 16.3 percent, and partner income averaged $473,897. Firms with less than $2 million in fees grew an average 5.2 percent and the average income was $190,802. But with more small companies on the compliance hook, you have to wonder whether a pop for small accounting firms is in the making. They may be able to boost their billable hours.

For more:
- here's a brief on the survey from WEBcpa.com

Related articles:
- Mid-caps struggling with Sarbox compliance?
- How much do data breaches really cost?
- Compliance market still in growth mode

ALSO NOTED: Is Dell a Sarbanes-Oxley test case?; More HP compliance training;and more ...

Mon, 02 Apr 2007 20:01:38 -0400

> Section 404 mandates financial reporting accuracy, which makes people-related costs a huge issue. Most firms spend up to 60 percent of budgets on salaries, benefits, training and other such costs. The role of HR in compliance goes beyond the whistle-blower provisions; it's a given that you need a step-by-step compliance procedure for dealing with the possibility of protected employees. Time for an activity-based system? Article

> Is Dell a Sarbanes-Oxley test case? That a company of such stature would delay a filing because it has caught some accounting issues and "evidence of misconduct" is not all that surprising in this age. It will be interesting to see how serious the deficiencies are. One might argue that because of Sarbox, the problems were caught. Others might say Sarbox should have prevented this type of stuff. Article

> Hong Kong exchange chief says Sarbox has helped his exchange, but not as much people think. Article

> Sarbox prompting companies to turn themselves in for overseas violations? A good idea? Article

> Value of new compensation disclosure rules debated. Article

> Chief Accountant in the Division of Corporation Finance to leave SEC. Article

> Life of an audit or compensation committee director gets harder, as stakes go higher. Article

> In this era of fiscal restraint, budgetary tightness at the SEC may spell relief. Article

And finally … Disappearing: Accounting professors. Article

New guidance for IT aspects of Sarbox

Mon, 12 Feb 2007 19:01:39 -0500

The strength of information technology systems when it comes to section 404 has a bitter bone of contention since Sarbanes-Oxley was enacted. Auditors, to the frustration of clients, have spent a lot of time trying to assess the strength of various controls, often relying on outdated guidance from the likes of COSO and COBIT. With AS5 released, the Institute of Internal Auditors (IIA) has released its anticipated guidance, which hopefully will put companies and auditors on the same page regarding IT. The guidance does not specify which systems are necessary across the board but rather offers aid for companies to determine which are necessary for its specific circumstances. This is in keeping with the recent reform measures. Some think it will give companies ammunition to confront their auditors, if the auditors are still taking the cover-your-butt approach.

For more:
- here's an article from CFO.com

Do accountants need liability protection?

Mon, 29 Jan 2007 19:01:39 -0500

Accounting firms have been on the hot seat for years. Their failures in some ways led to Sarbanes-Oxley, but the truth is that they have really prospered in the Sarbox era. All those mandated audits are more complex and pressure-packed than ever--and the billing is good, great in fact. But we're down to a Big Four, and that concerns some. SEC Chief Accountant Conrad Hewitt says that the Big Four should ask Congress for more protection from lawsuits in the face of corporate meltdowns. This has been the trend in Europe. One approach would be to do massive surgery to Section 404. Hewitt did say recently that the new PCAOB's guidance should help--many remain skeptical, however. If they are granted reduced liability, the industry's comeback will be complete. The burden will mount for other possible "culprits," notably CFOs.

For more:
- here's a Forbes article

Company makes Sarbox data feed available

Mon, 15 Jan 2007 19:01:39 -0500

AuditAnalytics.com has drawn a lot of attention from the regulators and financial types for its Sarbanes-Oxley data feeds, which offer information about compliance for specific companies. The company has just made a product available for money managers and institutional investors. The feeds package provides up-dated information on Section 404 and 302 disclosures and financial restatements for all SEC registrants. Each feed includes an option to add information about the auditors who signed off or were involved in the restatements, the text of the opinions and other communications. So we're living in world now where hedge funds and others will have instant access to your compliance records. They will be able to make hay with it as necessary. Not that that's a bad thing. But with lots of hedge fund money being put to work, these issues are basically ammunition--to which they have faster access. Get used to it.

For more on AuditAnalytics.com:
- here's a press release

Will the SEC's new rules help small companies?

Mon, 18 Dec 2006 19:01:39 -0500

If you run compliance or finance at a small-company, the SEC's latest Sarbox proposals give you a lot to ponder. On one hand, many will likely see the proposals as a disappointment. Smaller public companies will be granted an exemption from Section 404, which is what the venture industry really wanted. And compliance deadlines remain the same (the end of 2007 or 2008). But that doesn't mean there was no relief. A lot of the measures proposed will have a huge impact on small companies. In particular, managerial knowledge of the company can be used as a basis of compliance, which might allow some to shave costs of outside consulting. The big issue comes down to whether the Sarbox rules are truly scalable. The short answer seems to be "yes." How much this will reduce the $1 to $3 million in compliance costs that the average VC portfolio company pays is still unknown.

For more:
- read this Red Herring article