Something to Consider September 2017
Latest SOX Research Challenges Previous Claims
It has been fashionable in recent years to berate Sarbanes-Oxley with claims that the benefit has not been worth the cost and SOX obligations represent an unnecessarily heavy overhead for the business.
The latest research has found a statistically and economically significant association between Material Weaknesses in internal controls and the future revelation of negative occurrences that affect the business. Companies that have previously been found to have Material Weaknesses are 80-90% more likely than companies in general to experience subsequent negative impacts such as fraud, error and waste. Few of us experience Material Weaknesses on a regular basis but what might be the statistical impact of a Significant Deficiency or even a Management Comment? It is clear that controls weaknesses have an operational impact.
The financial controls challenge and related SOX impact is further exacerbated by the complex infrastructure of enterprise applications and related systems that support our business processes, and to some extent automate our controls in a global business.
The research further highlights the importance and continued relevance of having an early warning system in place for business processes, to ensure our businesses run effectively, efficiently and ‘as advertised’.
To read the full article, please click here
Our ‘Something To Consider’ snippets are framed by our thought leadership around the pillars of World Class Finance – Process Optimization, Financial Control and Compliance, and Risk Assurance, all underpinned by ERP and IT Enablement and integration. We welcome your feedback, comments and or criticisms.