The Human Side of Compliance

CFOs often complain that the Sarbanes-Oxley Act represents a harsh overreaction to the corrupt acts of a few bad apples. Besides, they say, the new law cannot prevent fraud if an unethical manager is determined to skirt the rules. This argument points to one of the steepest challenges of sustaining compliance over the long haul: people. "As good fraud auditors already know, any individual -- from the most pious to the most incorrigible -- can be prone to commit fraud due to fundamental 'people factors' that emerge given the right external stimulus," notes Dwayne Jorgensen, director of the Sarbanes-Oxley services practice for consulting firm CTG's information security solutions division in Duluth, Ga. Public companies have strengthened their financial reporting processes and installed new technology to help monitor internal controls, but one bad apple on staff can poison those staggering investments. Companies with a long-term commitment to Sarbanes-Oxley compliance and corporate governance address the human challenge through effective communication, compliance training and staffing decisions. Most important, compliance leaders translate the abstract notion of "tone at the top" into a practical and visible component of daily decision-making throughout the organization.

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