Major things IT managers will have to dowhen Sarbanes-Oxley becomes fully implemented Essay
The major things that IT managers will have to do differently when Sarbanes-Oxley becomes fully implemented and effective
The Sabarnes -Oxley Act was the response to the Enron and Arthur Andersen scandal. The company presented glaringly financial statements that did not show the true income in its income statement and balance sheets. There many other companies that had the same fate as the Enron debacle. This act gives the minimum requirements that a company should implement in order to present a more accurate ( as compared to the previously FAIR) balance sheet and income statement. The following paragraphs describes the nuances of the responsibility and the role of the information technology managers as they go hand in hand with the other managers of the company in the compliance of the minimum requirements of the Sabarnes –Oxley Act.
The Information Technology managers should differently do major things when the Sarbanes – Oxley Act becomes fully implements and effective. First, the Information Technology managers should improve or strengthen the internal security within the company. Second, The information Technology managers should improve the maintenance activities. So that the software programs will not be easily corrupted or infected with virus. Third, the software should replace
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First, the information technology managers should improve or strengthen the internal security within the company. The people who use the computers should have passwords. Also, only authorized personnel are allowed in the buildings where sensitive information is kept.
Second, The information Technology managers should improve the maintenance activities. And, the software programs will not be easily corrupted or infected with virus.
Anti –virus software include Norton Anti- virus and others. Also, firewalls should be set up to block unwanted websites, advertisements and questionable emails.
Third, the information technology department should cooperate with the accounting and other departments as the organization replaces its best estimates policy in recording of daily business transactions to more accurate in the gathering, collecting and interpretation of data. Russ Banham (2005) stated that it the trend is no longer to present financial statements such as the balance sheet and income statements. Now, there strong pressures to produce financials statements that are more accurate with the help of the computer software with the advent of the Sarbanes- Oxley act. For, Sarbanes –Oxley
does not stipulates the minimum requirements that certified public accountants should assume in relation to the accuracy of all assets that will serve as guidelines on
the imposition of punishments on Chief Executive Officers and Chief financial officers.
For, the Sarbanes –Oxley act has placed greater emphasis on the economic value of businesses intangible assets of all kinds. Thus, accuracy through the help of information technology has become a business priority.
Susan Switzer stated that the internal audit reports should follow the steps outlined in the Sarbanes Oxley act. The information technology managers should implement necessary steps to hasten the implementation of the CHANGES dictated by the Sarbanes Oxley act. The changes include the new format of the auditor’s report including value added communication, the choice of sentences the mechanics as well as the graphics(Switzer, 2007).
Furthermore, McKendrick (2005) stated that the information technology managers should compulsorily concentrate on the new trend which is a broader management information system under the new Health Insurance Portability and Accountability Act as well as the Sarbanes –Oxley Act of 2002. Again, the information technology managers should incorporate these new itineraries in their schedules. For, the information technology sector must assist the insurance carriers, brokers and other companies regain speedily from systems and outage mishaps. Mishaps definitely drag businesses down the gutter. The new trend is that the information technology managers combine their capability with the chief financial officer, chief executive officer and other managers to come up with a more complete decision and action. Ted DeZabala stated that “The insurance industry is moving from recoverability toward resilience,”(Ibid). He is the national leader of Deloitte & Touche LLP’s security services team.
Also, Nancy Bartels(2005) stated that the Sarbanes –Oxley act is only part of the complete business environment’s picture. Jay Jeffrey stated that “I don’t know how these manufacturers keep up with what’s out there”. He is the information technology program manager for e-compliance solutions that produces the business software Wonderware. The comment “What’s out there” is a compilation of the rules and regulations of the go local(state) and national government(federal) that manufacturers and other producers have to obey in order that they will not be charged in court.
Furthermore, John Hagerty (2004) stated that companies must now invest lots of money in information technology in order to comply with the minimum requirements of the Sarbanes –Oxley Act. These costs would be in the area of tightening corporate governance, disclosure and financial accounting rules. Also, the company must disclose all necessary information in order to generate a more accurate balance sheet, income statement and statement of cash flows. In detail, more accurate financials statements are needed so that the users of the financial statements can make better decisions. Basically, the information technology team must work hand in hand with the other departments of the company such as the corporate and financial managers in compliance with the Sabarnes Oxley Act. Thus, the information technology managers are the links to a speed and more accurate compliance of the Act.
Randy Brasche (2004) stated that the information technology department has a very big role in the implementation of the Sabarnes –Oxley Act. Previously, this Act was a pain in the neck of the Chief Executive Officers and Chief Financial Officers. For, they were worried that they would be the next to land in jail. But today, they are now well versed in the correcting of prior year errors. With the scarce money resources, the information technology managers together with the financial managers have to make do with what they have to produce a more accurate report. For, the company cannot spend excess time and money on work repetitions because the jobs were not done properly thefirst time around. In fact, many information technology professionals have been to key or the secret ingredient as companies tried to comply with the deadline. The companies were only given short notice to fix their together and to produce more accurate balance sheets, income statements and statements of cash flows. In fact, Sally Chan (2004) stated that companies were legally bound to comply with the Sabarnes Oxley Act in order to eradicate the likes of the Andersen and Enron Scandal. For, malfeasance is a violation of the laws of the United States. This Act was finally approved in the year 2002 to help bring back the public’s trust in companies trading their stocks in the market today.
In summary, the Information Technology managers should differently do major things when the Sarbanes – Oxley Act becomes fully implements and effective. First, the Information Technology managers must constantly improve or strengthen the internal security within the company. Second, the information technology managers should implement better maintenance activities. Further, the software programs must not be easily corrupted or infected with virus. Third, the software should replace its policy of fairly presenting the assets, liabilities, capital, revenues, expenses and other accounts better. This new Sabarnes Oxley Act policy dictates that the recording of daily business transactions should be more accurate than the pre –Sabarnes Oxley Act era. For, the act only aims to make companies give better done financial statements because these will the main basis for the financial statement users’ decision making acts. The users or stakeholders will use the financial statements to interpret, analyze and decide on what their next steps will be. One of which is to invest more money in the company (generally when the company is doing good) or to divest their money from the company ( generally when the company is losing money and there is no hope at the end of the tunnel that the company will resiliently bounce back to its income generating form. This is where the Information Technology managers are needed most ( Speed and Accuracy).
Banham, R., BanValuing IP Post-Sarbanes-Oxley: it’s no longer a matter of making a best estimate, Journal of Accountancy, Nov, 2005
Switzer, S., Internal audit reports and Sarbanes-Oxley; a guide to process-driven reporting, John Wiley & Sons, New York, 2007.
McKendrick, J., Insurance Networking News: Executive Strategies for Technology, Management, May, 2005
Bartels, N., Sarbanes-Oxley isn’t the half of it: holistic approach to compliance reaps rewards beyond avoiding fines or staying out of jail, Manufacturing Business Technology, February, 2005
Hagerty, J., Costs of Sarbanes-Oxley compliance rising: the bottom line: companies must earmark significant business and IT resources to meet Sarbanes-Oxley compliance requirement for this year and beyond.(Technology), Supply Chain Management Review, September, 2004
Brasche, R., Sarbanes-Oxley is an IT Responsibility Business Opportunity
DM Review, December, 2004
Chan, S., IT and Sarbanes-Oxley: there’s no question that meeting the requirements of the Sarbanes-Oxley Act (SOX) and good IT management go hand-in-hand, but companies should be aware that there are greater benefits to be had from this link than simply meeting mandated compliance requirements. SOX should usher in new and more effective ways of managing businesses. CMA Management, June, 2004