SarbOx Sustainability

Raleigh, NC

This final installment of our series on SOX Sustainability concerns sustainability "Planning.”  In Part 1 we introduced Planning and the fundamental building block for achieving Sustainability.

Planning

Each enterprise is unique and contains its own mix of culture, process, technology, management, integration, testing, and change management.  Accordingly there is no one sustainability plan that will work for two or more companies.  Each plan is unique for a given enterprise. 

Companies with highly evolved cultures, solid internal audit teams, and a tradition of solving problems internally need different things than companies with transitional or new staffs, outsourced HR and I/T, and contractors occupying every third desk.  Likewise companies with highly integrated I/T systems and tape back-ups of their ERP data need different things than companies running multiple, disconnected platforms with spreadsheet back-ups on USB flash-drives.  Companies that employ ex- auditors from Big 4 Public Audit companies in their Finance and Internal Audit groups need different things than companies who have no onboard, public-auditor experience.  The sustainability approach must be custom tailored for the enterprise and focused on using corporate assets wisely to suit the unique needs of the company.  Return on investment must be a metric for sustainability projects to set the tone for the projects.  Performance and completion timelines for the initiatives must also be metrics to ensure a sense of urgency to move forward and to tightly control consulting dollars and “scope creep.”

There is nothing magic to sustainability planning to support efficient SOX compliance.  There is, however, a lot of discipline, a lot of blocking and tackling drills, and a lot of dialogue required to make it happen.  And there is enough at stake, monetarily and otherwise, to warrant doing it right the first time.

In the SEC roundtable on April, 13, 2005, the SEC commented that SOX compliance requirements must be individually evaluated and tailored to each company.  Checklist approaches to auditing and to identifying what is appropriate for any given company, are not what was intended or envisioned.  The “one-size fits all” mentality is the wrong mentality.  To implement a sustainable, cost-effective program requires consideration of the individual characteristics, capabilities and operating style(s) of the public company.  We could not agree more.

We conclude this series by offering the following recommendations and suggestions to help you move forward with your own (corporate) sustainability initiative. 

1. Review all the installments of this series
2. De-brief with a cross-section of management and staff across the enterprise to clarify how SOX has affected (or is affecting) them.  This includes determining where information channels may have failed and where inefficient practices are gumming the works.  How is SOX playing out across the enterprise, not only in Finance!
3. Calculate or estimate the enterprise costs (in dollars and human resources) for the next 2-5 years if the sustainability initiative is not pursued.  This is the benchmark against which any sustainability initiative should be measured.  If savings are not projected to exceed the estimated incremental compliance costs then the initiative is suspect or unwarranted.
4. Review international issues if/as appropriate.  Is the initiative for domestic U.S. parent or subsidiary only?  Should European entity be addressed in view of future pseudo-SOX EU law?
5. Determine how you will address each of the main areas (culture, process, technology, integration, management commitment, testing and change management in a sustainability plan
6. Engage the Board of Directors and Independent Auditor.  Communicate the intent and goals of the sustainability initiative and seek support and recommendations.  Identify concerns that should be factored into the initiative goals and/or boundaries
7. Evaluate other corporate initiatives and/or needs to see if it makes sense to merge or reconsider budgets for highest value needs.  If a new I/T application has already been approved for purchase, can/will the new application help support the Sustainability initiative? 
8. Determine how you will appoint or empower a leader for the initiative.  The leader should be someone with plenty of experience in business process (re)work, management, and technology, who can work with people, process and technology.  Determine how you will evaluate or grade that leader’s performance on the initiative (whether the leader is an internal PM or outsourced (consultant) PM
9. Establish goals and objectives for the initiative, including tangible numerical cost improvements or reductions to help focus attention on the endgame
10. Establish reasonable deadlines and goals for completion of high value phases of the initiative
11. Determine whether you have the internal (intrinsic) capabilities, support, objectivity and commitment to sustain an extended (possible 1-2 year) sustainability program
12. Select one or more outsource providers of service and support if your internal resources are overtaxed or unprepared to manage and plan the initiative
13. Clarify or establish a limited scope trial or initial phase of the initiative to bound the early work.  What can be accomplished of a meaningful nature in 3-6 months?  This may be especially important if you engage outside consultants as you will probably want the assurance they are focused on achieving tangible and meaningful (positive) results monthly and not becoming ‘leeches’
14. Identify reasonable boundaries for the initiative (Budget?  Scope?  Geographic location? Incentive plans?  Other? )
15. Pull the trigger

 This concludes series on SOX Sustainability.  We hope you have found the series helpful in planning how to achieve sustainable compliance in your organization.   To review earlier articles in the series please visit Visage’s website at the URL below.

VisageSolutions is a group of experienced operational executives focused on providing efficient, repeatable complinace (including Sarbanes-Oxley) solutions. By working carefully with their clients VisageSolutions provides customized solutions that focus on reducing the “operational cost” of sustained compliance through an optimum combination of existing and new technologies and tools, and business process integration.  See www.visagesolutions.com for more information and related links.