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Aiding Compliance

Adecco is helping companies do the right thing by providing guidance on the implementation of Sarbanes Oxley legislation

The Sarbanes–Oxley Act of 2002 was enacted by the United States Congress to help improve internal governance systems at publicly traded companies. The legislation, also known as Sox, imposed tough reporting and record-keeping requirements and mandated senior executives to take personal responsibility for the integrity of the data their companies provide.

Section 404 of the Act requires senior managers to produce a report discussing the effectiveness of their companies’ internal controls for financial reporting. This often leads to significant changes or even the entire replacement of existing information systems with ones that provide better document management, more access to financial data, long-term information storage and auditing capabilities. The increased hours and excessive travel that is often required as a result is usually a huge distraction from an internal audit's main functions.

Early in 2006, one leading foreign-held producer of construction materials faced its first year of Sarbanes Oxley compliance and urgently needed help in preparing its assessment of internal controls. The company reached out to Adecco Finance to provide guidance to the business unit managers and assist them with the design and implementation of new internal control systems.

“Our client’s business units had been operating independently to achieve compliance, but they lacked overall direction and were inconsistent in their approach,” explains Michael Green, Senior Manager, Business Development, Ajilon Finance Solutions, a subsidiary of Adecco Finance in US. “The situation was complicated by the fact that resources for the company’s internal audit group were stretched and they didn’t have the expertise or the time to devote to compliance efforts.”

Senior experts from Ajilon Finance Solutions took on the role of advisors for the project. The team reviewed the company’s processes and controls at each business unit; it conducted multi-site location visits with managers to monitor progress, and directed walkthroughs, testing and remediation exercises at each unit.

One of its first orders of business was to standardise the company’s documentation, test plans and remediation exercises, and to make them consistent across business units. Because individual business units had not been given adequate direction many had chosen to document process how they saw fit, or not at all.

“When our consultants recommended individual business units put in place changes to documentation and test plans,” Green says, “there was difficulty in gaining quick approval because of logistics and the understanding of local procedures compared with parent company procedures.”

Adecco’s team of consultants soon uncovered issues that could have been considered significant or material by the external auditors. They wrote corrective action plans to address the deficiencies and helped the company improve their overall internal control structure.

By the time the company’s external auditors conducted their review of internal controls, the company was well prepared. The auditors were able to rely on the company’s assessment, which resulted in a quicker, cleaner audit, and ultimately reduced the overall cost.