Accounting errors within the Oxly Sarbanes Act

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The Act oxly sarbanes (correctly spelt Oxley Sarbanes), attempts to tightenup corporate financial accountability by implementing safeguards against accounting errors and fraudulent procedures brought to light during the high profile Enron, WorldCom and Orange County scandals.

Following the collapse of Enron Corp. in late 2001 regulations to address the failures in the governance, internal controls and disclosure practices of public companies were introduced.

A key part of this Sarbanes Oxly law, was to define and document internal controls of financial systems and processes.

Also, regulations appeared to be putting the pressure on IT, as they had to do far more auditing and internal controls to ensure there is little conflict of interest. Sarbanes Oxley will force firms to take enterprise content management seriously for issues like content security and records retention.

Therefore many software companies have produced there software with regulation specific add ons to automate compliance further.

IT executives at publicly traded companies will be taking a hard look at what is necessary to become compliant, and potentially overhaul their corporate infrastructure, software, and processes.

It is still unclear exactly how deep an overhaul IT will need to undertake,publicly traded Fortune 1000 companies will spend as much as2.5 billion this year in compliance related projects.

IT managers should begin with relatively small compliance efforts such as turning on controls within existing systems and standardizing processes, but also should consider longer term and more expensive projects such as upgrading systems and consolidating multiple ERP instances.

To be compliant, the software must provide an adequate audit trail that shows where data came from, to whom it went, and who approved its accuracy as it traveled through the system,

The oxly sarbanes act doesn t end with good tracking. In the past, financial reporting software was retrospective, focusing on what had already happened. Oxely Sarbanes requires reporting any change in earnings forecast or an event that could affect the final resultswithin 48 hours.