Sarbanes-Oxley (SOX) has been called the most sweeping legislation to hit U.S. corporations since the creation of the Securities and Exchange Commission (SEC) itself after the Great Depression.
Drafted in response to high-profile corporate scandals at Enron, Worldcom, Global Crossing, and others new and existing software vendors are popping up everywhere, with the hopes that they can sell companies a piece of the solution. However, technology needs to be viewed as an enabler of improvements to processes, or companies will find themselves with software that doesn’t meet their needs and additional costs that they didn’t expect to incur.
Typical process enablers include document management, business process management, collaboration tools, business intelligence, and business performance management, ERP systems, auditor tools, and security/storage/e-mail tools. In this article I will talk about business performance management and its support of SOX compliance.
So, what exactly is BPM and how can it help with SOX compliance?
Performance Scorecarding is an area of BPM solutions that helps companies set and communicate goals, establish key performance metrics and accountability, and continuously measure performance against company goals and objectives. As a control mechanism, major deviations from best practice benchmarks should be a red flag to CEOs and CFOs, auditors and board-level audit committees. An executive dashboard of closely monitored key performance indicators can reduce control risk, especially in an environment of higher inherent risk.
Planning, Budgeting, Forecasting and Business Modeling allow companies to move away from the yearly budget and embrace the concept of continuous planning. This reduces control risk by enhancing the timeliness, availability and accuracy of information, facilitating the additional analysis of information and enhancing the ability to monitor the performance of the company’s activities, its policies and procedures.
Financial Consolidation and Reporting helps customers reduce financial consolidation and reporting cycles while providing the detail and process control to meet the most stringent of regulations. Financial management software can help satisfy new shareholder, investor and government requirements for disclosure, transparency and accountability.
CFOs and CEOs not only acquire the fastest possible access to financial results, they can also review an audit trail of approvals throughout the consolidation and reporting process so they are comfortable in signing off on the financial statements as required by SOX Section 302. Also, controls that prevent or detect errors can be added to the system to ensure completeness and accuracy during the financial consolidation reporting cycle.