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How Nov. 15, 2004
Deadline for Sarbanes Oxley 404 Compliance Affects You |
by:
Chris
Anderson |
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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