Perhaps the biggest information-technology expenditure for small and medium sized companies is bringing their systems into compliance with the Sarbanes-Oxley Act.
What is the Sarbanes-Oxley Act?
The Sarbanes-Oxley Act was signed into law to put rules in place that regulate the way businesses conduct their financial and accounting practices. The Act has had a significant impact on all kinds of businesses, from small private companies to large corporations. The Act was signed in 2002, and has been in effect since November 15, 2004. If your business has not already been looking into compliance issues, now is the time to start. If your business has, perhaps it is time to step it up a notch.
What does it cover?
So what exactly does the Sarbanes-Oxley Act entail? It actually covers a whole range of governance issues. Some topics include the types of trade allowed within a company and the regulation of the responsibilities of auditing committees sent in to investigate and verify companies' compliance with the Act. On the whole, it offers protection for companies' employees and investors by ensuring proper financial business practices.
Why should you comply?
Demonstrating compliance with the Sarbanes-Oxley Act has benefits on different levels. With strict regard to the law, it can keep your company from being in violation of the Act, which could bring on serious consequences, such as heavy fines. Even if your company is not in violation, your demonstrable compliance with the Act has just gained you a large amount of trust from employees, shareholders, other companies, and the government.
The next step...
While much of the Sarbanes-Oxley Act's ideas and requirements are common sense and achievable, the challenge of the Act is being able to demonstrate that compliance has been observed and is being properly reported. This is where IPI comes into play. IPI provides consulting and auditing services to ensure your business is in compliance with the Sarbanes-Oxley Act.
In Phase International's expertise in dealing with government regulations comes from many years of doing business with federal, state and local entities. While IPI's area of focus in the past has primarily been in the health care sector, IPI is more than capable of providing quality consultation for corporate information security issues and management of business processes as well as customer service to small and medium sized companies in almost any industry. Integration of sound business processes with good customer relations as well as integrating Section 404 reporting with a company's financial systems would seem to be an ideal approach to Sarbanes-Oxley compliance, a Federal mandate for corporations.
One of the problems small to mid-cap companies face under Sarbanes-Oxley is time. IPI can help small and medium size businesses achieve these goals in a timely manner. Quarterly reports must be filed within 35 days in 2005 and annual reports must be filed within 60 days of the close of the year. Many of these companies cannot afford to upgrade their systems, so they rely on older (and slower) systems for reporting financial data. With these legacy systems, periodic data transfer may not be done frequently enough to ensure that decision-support systems and financial reports are up-to-date and accurate. IPI solves this problem by designing, implementing, and supporting secure information systems that efficiently integrate financial data and ensure SOX compliance. It is the process management that can make or break small to medium size businesses. IPI can provide client concentric solutions to business problems.
If you would like to gain more insight into the effect the Sarbanes-Oxley Act is having, check out the following articles.
Sarbanes-Oxley and Health Plans The structure of employee health plans often obscures the view of benefit costs and internal controls that the Sarbanes-Oxley Act demands.
Stuck in the SAS 70s As Sarbanes-Oxley Section 404 meets up with an obscure auditing standard, many companies are thinking hard about offshoring their business processes.
Frequently Asked Questions
View frequently asked questions about the Sarbanes-Oxley Act in the Sarbanes-Oxley FAQ.