Business Risk Authority Predicts Increased Trickle-Down Effect of Sarbanes-Oxley for 2004.Business Editors CHICAGO--(BUSINESS WIRE)--Dec. 22, 2003 In traditional consulting, Grant Thornton's business advisory expert sees organizations becoming more accountable Greg Pitzer, partner in charge of Grant Thornton's business risk services, predicts 2004 will be a busy year for public and private companies, including not-for-profit organizations, as corporate governance Corporate Governance The relationship between all the stakeholders in a company. This includes the shareholders, directors, and management of a company, as defined by the corporate charter, bylaws, formal policy, and rule of law. requirements continue to trickle down Trickle down An economic theory that the support of businesses that allows them to flourish will eventually benefit middle- and lower-income people, in the form of increased economic activity and reduced unemployment. from public companies. Additionally, Mark Oster, a business advisory services advisory services advisory services provided to the public, in their capacity as owners and managers of animals, are an important part of veterinary science. They may be provided by government bureaux, by commercial companies who deal in pharmaceuticals or animals or animal partner with Grant Thornton's New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of office, sees an increase in performance measurement and technology effectiveness services as accountability for both private and public companies continues to rise. Implications of Sarbanes-Oxley to be further felt in the private market and not-for-profit organization level. "Even though Sarbanes-Oxley was passed with only public companies in mind, the trickle down effect of the Act will continue to grow in the private sector," Pitzer says. "For example, private companies and not-for-profit organizations may soon be required in certain states to verify that their financial reports do not contain false statements, that they maintain adequate internal financial controls and that any deficiencies have been reported to the board of directors and external auditors The examples and perspective in this article or section may not represent a worldwide view of the subject. Please [ improve this article] or discuss the issue on the talk page. . The use of Sarbanes-Oxley as a benchmark for financial governance Governance makes decisions that define expectations, grant power, or verify performance. It consists either of a separate process or of a specific part of management or leadership processes. Sometimes people set up a government to administer these processes and systems. policies will continue to grow in 2004." Importance of SAS (1) (SAS Institute Inc., Cary, NC, www.sas.com) A software company that specializes in data warehousing and decision support software based on the SAS System. Founded in 1976, SAS is one of the world's largest privately held software companies. See SAS System. 70 reports will grow. "As public companies go through the certification process this year - as required by Section 404 of the Sarbanes-Oxley Act See SOX. - more organizations will have to take a hard look at their various service providers, including IT, and obtain and review SAS 70s (Statement of Auditing Standards No. 70) An AICPA standard for auditing service organizations. Internationally recognized, it enables an independent auditor to review a service provider's controls for safeguarding its customer's data. ," Pitzer explains. A Type II SAS 70 report is a report on the design and operational effectiveness of the controls over those processes that a third party service provides to the client. "External auditors are going to start requiring companies to get a SAS 70 report before they will sign-off on the internal controls. Currently, there are a lot of third-party service providers who either don't provide a SAS 70, or they provide a Type I SAS 70 that only addresses control design, not the operational effectiveness of the controls." Internal audit professionals in greater demand in 2004. Sarbanes-Oxley and the listing agencies (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on and NYSE NYSE See: New York Stock Exchange ) require public companies to have an internal audit function that must maintain and continuously test the internal controls required by the Act. "For those companies who either didn't have an internal audit department or had only the basics, in 2004 they will need to be on the look out for talented internal audit personnel. For internal audit professionals, this will be quite advantageous." Interest in performance measurement management will grow in 2004. "As accountability to boards of directors and stakeholders Stakeholders All parties that have an interest, financial or otherwise, in a firm-stockholders, creditors, bondholders, employees, customers, management, the community, and the government. increases due to Sarbanes-Oxley and other corporate governance reforms, more organizations are focused on finding a framework that they can report against and track expectations," explains Mark Oster, business advisory services partner. "Organizations need to find ways to link strategies and defend outcomes with business practices and procedures." "One way to do that is to establish key performance measurement tools that provide answers to tough questions." More companies in 2004 will examine technology investments and perform operational reviews. "The idea of accountability is driving the increased interest in quantifying technology investments to ensure that they are yielding the promised benefits. Organizations must be efficient in their spending, and it hurts an organization when the investment isn't providing the right benefits," Oster says. "Operational reviews are becoming more popular because there is significant financial pressure on organizations to perform operations efficiently and effectively and within appropriate budgets." About Grant Thornton Grant Thornton International is the world's leading accounting, tax and business advisory organization dedicated to mid-size companies. Through its network of 585 offices in 110 countries, including 50 offices in the US, partners of the member firms of Grant Thornton provide personal attention and seamless service delivery to public and private clients around the globe. Grant Thornton LLP's web site is www.GrantThornton.com. |
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