Are You CRAZY? Why Would Any Company Do That?
Reaping the benefits of "voluntary" SOX Compliance.
August 7, 2008
Sponsored by Intelli-Solve LLC
One of the indirect results of the Enron and WorldCom scandals and resultant passage of the Sarbanes-Oxley Act of 2002 and high visibility SOX compliance initiatives has been an expectation for greater accountability from all organizations and their managers. Nonprofit and private companies are coming under increasing pressure — from lending and funding sources particularly — to undertake “voluntary SOX compliance.” These requests are often poorly defined and meet with considerable resistance from company managers because of the fabled “exorbitant time and dollar costs” associated with SOX compliance. So why would a company that is not required to comply with “SOX standards” actually choose to do so?
Many publicly-traded companies required to comply with SOX standards, usually in their second year of compliance and beyond, view SOX very differently than when completing initial compliance. As their control environments mature and affected staff takes greater ownership in control activities, companies often realize the benefits of enhanced operating efficiencies associated with improved control activity flows. Often, these results include: revenue increases, cost reductions and/or better use of human resources and intellectual capacity and increased confidence in accounting and financial reporting functions.
Given the experience of publicly-traded companies, the benefits listed above provide several very good reasons that nonprofit and private companies along with governmental and quasi-governmental groups should consider voluntary SOX initiatives, even if they’re not under pressure to do so. Here are some additional ways that organizations not required to comply with SOX requirements can benefit from voluntary SOX compliance:
Those organizations have the additional advantage over publicly-traded companies that they don’t need to complete full “SOX compliance” the first year. These companies can take a truly risk-based approach and begin in those areas that provide them the greatest immediate benefit — typically control environments related to purchasing and payments or revenue tracking. As improvements in operating and control environments in these areas are completed, these organizations can then move into other lower risk areas and repeat the cycle. Accomplishing these activities in ways that are visible to relevant stakeholders provides the basis for companies to reap the benefits listed above.
For more information, visit Intelli-Solve LLC.
Torrey Carlblom is the President/CEO of Intelli-Solve LLC and has extensive background with business management, corporate finance and financial systems. He has been helping companies strengthen and certify their financial and IT control environments since the signing of the Sarbanes-Oxley Act.