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Supplier Compliance: The Responsibility Lies with You

Supplier Compliance: The Responsibility Lies with You

by Rick Turoczy on November 11, 2005

As everyone who has not been hiding in a cave the last four years knows, Section 404 of the Sarbanes-Oxley Act (Sarbox) stipulates that public companies must demonstrate proper controls over financial transactions and internal processes. Every internal system and process is subject to intense scrutiny, and the documentation that must be provided is just this side of what was used to send the Apollo 11 astronauts to the moon.

What is less known, however, is that the provisions of Sarbox also make the purchasing company responsible for the quality of their suppliers’ processes and controls. This can be a far more difficult assignment. After all, you know (or should know) how your organization operates. But how about your suppliers?

If you’re outsourcing any type of services, from applications delivered by a managed service provider to contingent workers to an offshore contact center, this lesser-known requirement leaves you with two options. One is to conduct your own audit of all your suppliers. This method will provide you with the assurances you need, but it’s not very feasible. After all, think of how long it takes to audit your own internal systems, where you already know how they work.

Supplier Compliance: The Responsibility Lies with You

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