Situation
As the first year of Sarbanes-Oxley compliance draws to a close for many companies, public disclosures and filings indicate adherence to the legislation's Section 404 has largely been achieved. But an examination of the compliance processes with which companies are left might call into question whether current methods are operationally sound—and if the continued responsibility of meeting Sarbanes-Oxley requirements can be executed in a cost-efficient manner.
Our Perspective
A sustainable approach to Sarbanes-Oxley requires a transition in both form and function—out of a "one-time project" approach and into a mode in which compliance is well integrated into a company's daily operations. Two factors drive this transition. First, quarterly reporting under Section 302 should align with annual reporting under Section 404, and management needs to consider how they will gain comfort in evaluating that this alignment is occurring. Second, companies must recognize and proactively address the impact of change on business processes and related internal controls and therefore the ability to sustain Sarbanes-Oxley compliance. Success will require a focused, defined program designed to operate year after year as a natural part of the business. Embedding compliance firmly in ongoing operations will require: 1) an organizational structure with clear accountability, 2) an efficient operating structure and 3) an enabling technology structure.
See full Information. Also see full White Paper, in pdf format.
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