Source: http://www.ppt-sharing.com/ppt-presentation/the-payroll-professional-s-perspective-on-sarbanes-oxley
Timestamp: 2019-07-20 05:49:04
Document Index: 523854644

Matched Legal Cases: ['§302', '§404', '§409', '§802', '§807', 'arts 8']

969 days ago, 287 views
The Payroll Professional’s Perspective on Sarbanes Oxley
﻿The Payroll Professional's Perspective on Sarbanes Oxley November 17, 2005 Presented by: Linda Obertin, CPP Vice President Fidelity Human Resource Services
A genda Brief Overview of the Sarbanes-Oxley Act (SOX) Act The Impact of the Sarbanes-Oxley Act on the Organization and the Payroll Department Compliance Framework Focus on Controls Sustainable SOX Compliance Point of View Case Study: HR/Payroll Controls Rationalization Case Study: ERP Controls Automation SOX and SAS 70
Getting Back On the Road to Compliance Committee of Sponsoring Organizations of the Treadway Commission (COSO) Formed in 1985 to support the National Commission on Fraudulent Financial Reporting Studied the causal elements that can prompt to fake money related reporting and created proposals for open organizations and their free evaluators, for the SEC and different controllers, and for instructive establishments. Great Practice Guidelines for evaluating the danger of fake monetary reporting
Catalyst for SOX.. (The Enron Story) The goals and underlying foundations of the Scheme to Defraud Present Enron as a beneficial business Report yearly profit development of 15 to 20 percent Meet or surpass distributed desires of industry experts estimating of income per share Maintain venture review FICO score Increase the estimation of Enron stock SEC Seconded Amended Complaint v Lay,Skilling and Causey
The Result Enron Executives Made a fortune Skilling: $103 Million Causey: $23 Million Lay: $90 Million SEC Seconded Amended Complaint v Lay,Skilling and Causey Enron Employees Lose a Fortune $3 Billion in retirement reserves when stock fell Total recouped: $150 Million ($17 Million for the lawyers) Investors
Sarbanes-Oxley Act (SOX) The Public Company Accounting Reform and Investor Protection Act An Act marked into law on July 30, 2002 Overseen by the SEC-last SEC interpretive guidelines issued on June 6, 2003 11 Titles comprising of 65 areas covering corporate administration, inspector freedom, monetary revelations, misrepresentation, and so forth. Built up "to ensure speculators by enhancing the precision and unwavering quality of corporate reporting" Sarbanes-Oxley requires the utilization of a structure to distinguish, archive and assess inside controls over budgetary reporting Provides an intelligent technique for examining a Company's control framework Criminal Penalties
Application of SOX Public Company Accounting Oversight Board Auditor Independence Corporate Responsibility Enhanced Disclosures CEO and CFO actually guarantee and confirm the exactness of the money related results ( §302) Management Assessment of Internal Control and Internal Control Evaluation (§404) Real Time Disclosure of material changes influencing an organization's monetary condition (§409) Criminal Penalties for modifying records (§802) and Defrauding Shareholders (§807) Enhanced Penalties for Non-Compliance White Collar Crime Penalty Enhancement (Title IX) Corporate Fraud and Accountability (Title XI)
Penalty of Non-Compliance Not having the strategies set up by the due dates will bring about de-posting of the organization by the stock trade or securities relationship through which its stock is exchanged. A week ago in a New York court Ebbers was discovered blameworthy of coordinating a $11 billion (£5.7 billion) misrepresentation that prompted to the crumple of WorldCom, the greatest chapter 11 in American history. The decision conveys a most extreme sentence of 85 years in prison. Lawful specialists figure that when sentencing happens in June, Ebbers will get 25 years. (Was sentenced to 25 years on 7/13/05) The 63-year-old will likely spend whatever remains of his life in prison. The case will likewise profoundly affect American corporate life — in transit Wall Street leads its business, the obligations of chiefs and the destiny of the individuals who break those duties. 3/20/05 Timesonline.co.uk
Penalty of Non-Compliance "Extortion's Many Helpers" The sheer number of subordinates who confront criminal accusations for these bookkeeping fakes gives a false representation of the myth that a portion of the greatest plans of the previous decade were completed by a little gathering of wicked officials. Or maybe, as the workers themselves relate under pledge, many individuals intrigued to conceal wrongdoings from evaluators and financial specialists. At Enron Corp., almost 30 confront criminal allegations. At HealthSouth Corp., prosecutors have arraigned 18 people who professedly misquoted their organizations' funds utilizing PC programming frameworks, arranged fake archives and made despicable passages on corporate bookkeeping records. Without their help, the cheats likely couldn't have occurred. Washingtonpost.com 3/20/05
Who is affected? Specifically influences Registered open bookkeeping firms Publicly exchanged organizations Companies during the time spent enrolling securities under the Securities Act of 1933 Indirectly influences Private organizations that may open up to the world later on Private organizations that might be procured by open organizations Private organizations in states considering embracing parallel enactment Private organizations with industry controllers Gov't Agencies which report into OMB (Office of Mgmt and Budget) Outsource Service Providers
Still Time to Comply Timeline Less than $75 million in market capitalization augmentation through July 15, 2006. More than $75 million in market capitalization are required to conform to the control for the primary financial year finishing on or after Nov. 15, 2005. Cost Most organizations burn through $3M on SOX Companies with under $1M in Revenue will burn through $550,000
Corporate Response Develop New Functional Role Internal Audit Role External Auditors SOX Compliance Role Expand Existing Responsibilities Internal Audit Role External Auditors
Sarbanes Oxley Initial Compliance Approach Answerthink Model
Hackett Rese curve Findings* Companies have extraordinarily enhanced their monetary reporting adequacy, because of Sarbox More than 66% of all organizations are presently alright with budgetary estimating and reporting yields, up from 9% a year prior Sarbox is putting a strain on enhancing the cost of fund, and the nearby process duration The cost of back as a % of income has not dropped without precedent for 10 years Close process durations have entirely expanded, to a little more than a week for middle and world-class organizations Companies are enhancing the straightforwardness and the dependability of money related gauges, yet are doing as such by utilizing an extremely work serious way to deal with Sarbox consistence which is devouring time and any investment funds from different activities *From The Hackett Group Book of Numbers , 2004
SOX Compliance Observations Cost of Compliance In a FEI think about in March 2005, 2004 SOX 404 consistence costs found the middle value of $2.1M per billion in income 1 The larger part of organizations anticipate that 2005 consistence expenses will diminish from 2004, with most organizations hoping to accomplish reserve funds of no less than 20% 2 According to a KPMG 404 Institute study, generally a large portion of the organizations are hoping to lessen the quantity of key controls as a driver of decreased consistence costs (2005 versus 2004) 2 Sources 1 FEI March 2005 gauge for organizations of $500-$999M in Annual Revenues 2 KPMG 404 Institute SOX S404 Benchmark Study, April 2005
SOX Compliance Observations Breakdown of SOX Compliance Costs for FY04 $1-$5 Billion in Revenue; $4.36 million in consistence costs Source: FEI Survey (March 21, 2005) N = 217
SOX Compliance Observations How are organizations wanting to decrease consistence costs? n = 69 Initial Compliance Activities Out of Company's Control Multiple Responses Allowed Source: KPMG 404 Institute SOX S404 Benchmark Study, April 2005
SOX Compliance Observations Drivers of cost of control and consistence Wide wraths in the quantity of key procedures and key controls is an essential driver of the contrasting levels of control expenses among organizations Opportunities to influence fund exchange preparing union stay Top organizations have utilized their IT foundation and application administration to decrease control many-sided quality Over 80% of organizations report that in any event half of their controls are manual Controls are weighted more toward analyst than preventive Approximately 70% of lacks are either control outline or working adequacy insufficiencies, not documentation inadequacies Source: KPMG 404 Institute SOX S404 Benchmark Study, April 2005
SOX Compliance Observations Business Impact A decentralized and manual control environment drives up the cost of both on-going control and SOX 404 consistence High inadequacy rate ascribed to the plan and operation of key controls focuses to the requirement for process change The high level of manual controls may superfluously convolute the control environment While consistence expenses might be diminished as a component of the SOX 404 "expectation to absorb information"; a managed lessening in the cost of control, and further decrease in cost of consistence, requires more prominent utilization of certain best practices: Process institutionalization and improvement Greater influence through process centralization Increased robotization of the control environment
Sustainable SOX Compliance – After Year 1 Point of View Sustainable Compliance Initiative Embed SOX Compliance in Organization Define and Align authoritative structure for long haul SOX consistence Operationalize extend based approach utilized as a part of starting consistence exertion Automate consistence organization through utilization of driving SOX devices Streamline Controls Framework Review controls for creation and number versus required huge record and affirmation scope Rationalize controls to organization standard per prepare zone/application stage Automate controls inside ERP, especially every day and week after week exchange controls Embed SOX Compliance in Organization Streamline Controls Fra
Parts 8: Psychoanalytic Perspective
Outlining Your Professional Workstation