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How
Nov. 15, 2004 Deadline for
Sarbanes Oxley 404 Compliance Affects You
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by: Chris
Anderson
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Public
companies have 90 days from the end of their fiscal year to comply. For
those with market capitalization of $75 million or more, this clock
starts on Nov. 15, 2004; while all others with less than $75 million
market capitalization begin July 15, 2005.
Fast Relief for Sarbanes Oxley Section 404 Compliance
Section 404 of the Sarbanes-Oxley Act requires management to confirm
the effectiveness of their IT and financial controls in an "internal
control report", which is contained within the annual report (10-K)
issued to the public. But what exactly is an internal control report,
and why is it important to you?
The Section 404 Internal Control Report
First, the internal control report must affirm management’s
responsibility for controls and procedure, and second, it must contain
an assessment of the effectiveness of the internal controls and
procedures for financial reporting. Although both of these issues might
at first appear difficult to solve, they are actually not as hard as
you would think.
Management’s Responsibility for Controls and Procedures
Affirming management’s responsibility for controls and
procedures
means more than to simply say management believes in or trusts their
system. The affirmation will also need to include a program for a code
of ethics for senior financial officers. The program must include
prompt disclosures of any changes to your ethics program. So how do you
do this?
Business Ethics and Compliance Program
You can easily implement a business ethics program using a step-by-step
guide for developing your firm’s business ethics and
compliance
program. This manual will save you time researching, writing and
editing your program. It provides sample policies, surveys, forms and
training session outlines that are fully editable using MS Word. And it
is also fully endorsed by The National Association of Corporate
Directors (NACD) as a tool to maintain a culture of integrity.
Internal Controls
Your internal control report must also contain an assessment of the
effectiveness of your internal controls and procedures for financial
reporting. In practical terms, control is equivalent to predictability.
Everyday management creates forecasts and budgets to predict the
future. And the further into the future you can accurately predict,
then the more control you have.
Achieve More Control Over Your Forecasts And Budgets
A training class for creating well defined processes shows you how to
attain more control. Real world exercises and examples explain how to
increase management effectiveness, achieve process control, communicate
clear procedures, and verify if your processes are working. So what
about procedures?
Procedures Effectiveness
For dealing with Section 404 of the Sarbanes-Oxley Act, you can look at
products like the Management CFO Value Series that includes Accounting,
Human Resources, as well as policies, procedures and forms for other
departments. Such procedures will save you time researching best
practices, creating a standard format, and thinking of clear and
concise paragraphs to write.
Easier Section 404 Compliance
Your internal control report is the key to your Sarbanes-Oxley Section
404 compliance. You should also look at a business ethics and
compliance program, attend a training class for creating well-defined
processes to learn more about management effectiveness, and use a CFO
Management Value Series to speed the development of your procedures.
You want to achieve fast, easy, and effective relief for your
Sarbanes-Oxley Section 404 compliance.
About the author:
Chris Anderson is co-author of policies and procedures manual products,
providing the layout, process design and implementation to increase
performance. He is currently the Managing Director of Bizmanualz, Inc.,
and holds a Masters in Business Administration from Pepperdine
University and a Bachelor of Science degree in Electrical Engineering
from Southern Illinois University. Visit: http://www.bizmanualz.com/accounting?src=ART68
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