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Looking for Gaps

Looking for Gaps

by Rick Turoczy on February 1, 2005

When last we looked at the Overtime Guarantee Act known as Sarbanes-Oxley (see “Sarboxing,” February 2004), finance managers were busy tapping out distress signals from Documentation Hill. At the time, the compliance deadline for Section 404 of the act was fast approaching. While Section 302 had garnered most of the media’s attention, 404 was proving to be the real compliance bear. Among other things, it requires companies to identify key business processes, the controls overriding the processes, and any vulnerabilities in the controls overriding the processes. Summarizing the 404 project at Public Service Co. of New Mexico, Carl Seider, analysis programming lead at the Albuquerque-based utility, says: “It was like, ‘OK, stop the world while we take care of this.’ ”

Instead, officials at the Securities and Exchange Commission stopped the clock, repeatedly pushing back the drop-dead date for implementing Section 404. That gave most accelerated filers a reprieve in 2004, but the deadline is once again looming for most companies (March 15 for dozens of large companies; April 15 for scores of smaller ones). And many finance managers say they will not willingly spend another year in compliance purgatory.

That’s understandable. Preparations for 404 have exacted a heavy price. Software maker Micros Systems Inc., for one, has spent roughly $4 million in the past two years on its compliance program for Section 404. And the Columbia, Maryland-based company, with revenues of $487 million, hardly qualifies as a corporate giant. “We’ve spent an enormous amount of money,” says controller Cynthia Russo. “More than we had planned.”

Looking for Gaps

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