Expertise > Sarbanes-Oxley

Sarbanes-Oxley

Simply put, Section 404 of the Sarbanes-Oxley Act of 2002 (the Act) requires “management assessment of Internal Controls.” However, the Act also changed the way business will be conducted in the United States. The greatest misconception of the Act is that it applies to public companies exclusively. This couldn’t be further from the truth.

Regardless of whether your organization is public, private or nonprofit, good corporate oversight is simply good business. The State of California has adopted provisions of the Act for certain charitable foundations to ensure adequate fiduciary oversight of public funds. Other nonprofits are adopting provisions voluntarily for the same reason.

As for privately-held companies, if your exit strategy includes options such as an initial public offering (IPO) or being acquired by a public suitor, compliance with the Act is either a necessity or makes you a more attractive target.

At RBZ, we believe compliance is just the first step. There are no easy shortcuts to deploy an effective system of internal controls – it may require substantial resources in time, personnel, and money. The first decision you make will be the most important: Should you aim at basic compliance with the Act or move beyond compliance to sustained improvement in business performance? The latter is a commitment to enhance operations, reduce unnecessary complexity, improve standing with shareholders, restore strong corporate culture and integrity of financial statements and reduce long-term cost. These benefits are simply too substantial to ignore.

Companies must plan, design, and implement an efficient and effective program for sustainable compliance. Anything less may result in unacceptably high costs, heightened risk of exposure to corporate governance, and, ultimately, a competitive disadvantage. A well-designed and intelligently implemented sustainable framework can provide significant benefits:

• Establish an exemplary risk management and governance structure recognized by independent rating services and rewarded by the capital markets
• Improve organization, process, and technology, resulting in greater accuracy, transparency, reliability and timeliness of financial information
• Eliminate redundant business processes and IT procedures
• Integrate financial reporting and internal control processes
• Redirect compliance efforts away from risk aversion and toward risk intelligence
• Improve accountability throughout the organization

Achieving full compliance involves more than just assessing internal controls – it requires an integrated approach that includes evaluating business processes and systems themselves. By identifying inefficiencies and redundancies, RBZ is able to implement changes that can improve both control and performance. After all, compliance is not solely about internal control – it is also about establishing optimal business practices in order to achieve stated objectives.

Contact
Thomas Leaper, Partner-in-Charge
Sarbanes Oxley Services
310.478.4148. x450 | tleaper@rbz.com