Sarbanes-Oxley Act: A CPA’s perspective
Complex corporatewide change initiatives are always a challenge, but none is more important than the Sarbanes-Oxley Act (SOX). There is little margin for error, and the consequences of a lax effort are far-reaching. Best poised for success is the SOX implementation team that breaks down barriers to communication and knowledge sharing, understands the needs of its business units and is plugged into future organizational strategic initiatives.
A disciplined planning effort enhances the success of SOX implementation. Special attention should be paid during the planning process to understanding and considering the specific business needs and processes of each business unit. That will ensure that all entities and business units are consistently and uniformly implementing the directives, procedures and deadlines dictated by the team.
To help understand the unique needs and ensure the free flow of communication and knowledge, the team should create forums and venues for the various business units to discuss issues, problems and resolutions. They can be real or virtual, printed or digital, but they must be relevant, practical and fit into the organization's culture. Good ideas that bubble up from the separate business units should be encouraged, but they should start as just that: ideas.
The SOX implementation team should avoid hasty adoption of a new technology. SOX is a perpetual process. As such, it might be beneficial to thoroughly understand all phases of the implementation and then evaluate instances where technology might help to close some gaps. It may also be helpful for the SOX team to examine the role technology plays in similar compliance and regulatory processes, and determine whether technology used there is effective and could be deployed in the SOX implementation.
Before a business unit decides they've got a better way, ensure it is consistent with the overall goals of the organization's SOX effort. Healthy and active forums can prevent silos and pockets of non-standard procedures.
Of course, the individual selected to lead the SOX implementation must have a deep knowledge of accounting and internal control structure and procedures. SOX requires that at least one "financial expert" hold a position on the board of directors' audit committee, and the SOX implementation leader must be able to match that expertise to confidently answer committee or board inquiries.
But to really succeed, the SOX implementation leader also needs to be an agile project manager who is able to plan and prioritize work and meet key deadlines. The leader must possess persuasive personal attributes that include leadership skills, the ability to effectively communicate, the knack of building coalitions and unquestioned integrity. With the right personal skills, subject matter knowledge and corporate leadership support, SOX implementation leaders can transparently transform a mundane series of new accounting procedures into "the way things are done around here." That is an incremental and important step to restoring investor and public confidence.
Girard Healy is a CPA and KM consultant in Boston, e-mail gmhealy@comcast.net.