Technology to help with SOX

Nearly half of senior US executives say their company made only satisfactory use of technology in support of its initial Sarbanes Section 404 compliance efforts. But major reinforcements are on the way for year two, according to a recent PricewaterhouseCoopers Management Barometer. Three in four US multinationals will be making significant technology changes, directed almost equally at the control environment and the compliance process.

Forty-seven percent of executives say their company’s use of technology in support of Sarbanes 404 compliance was “satisfactory—with lots of room for improvement.” Fewer, 38%, say their company did a “great” or “effective” job with technology. And 10% frankly identify technology as a problem area requiring major improvements, going forward.

Forty percent said their IT department responds effectively to requests for better ways to support the compliance process and improvements in the control environment. Fewer, 21%, describe their IT department as proactive in identifying ways to use technology more effectively.

“Sarbanes-Oxley compliance efforts are revealing weaknesses in controls and business processes and accelerating companies’ efforts to remediate these problems,” says Jacqueline Olynyk, partner, PricewaterhouseCoopers. “Overall, the surveyed companies have used technology in varying degrees to support their initial Sarbanes 404 compliance efforts, but there is clearly room for future improvements.”

Three of four surveyed multinationals expect to make significant technology changes in year two of their Sarbanes 404 compliance. Among those companies, 47% will give equal emphasis to the control environment and the compliance process; 18% will focus mostly on the compliance process, and 10% will give primary emphasis to the control environment. Only 21% say no significant technology changes are planned. Four percent did not report.

“Senior executives see technology as an opportunity for both enhancing future Sarbanes 404 compliance and achieving overall efficiency and effectiveness of underlying business processes,” says Olynyk. “For the 75% that will be making significant improvements, rationalizing the control environment and then embedding automated controls throughout cross-enterprise business processes will yield the biggest long-term gains.”