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Rising audit fees? Take a look at IBM’s latest compliance offering.
UK companies with a US listing are seeing enormous increases in their audit fees as they seek to comply with Sarbanes Oxley (SOX) legislation. The infamous section 404, where auditors rule on clients’ statements on internal controls, is applicable in the UK from 2006.
It is therefore timely for IBM to make available in the UK its Workplace for Business Controls and Reporting (WBCR) solution, a governance, risk, and compliance platform that delivers a way to help reduce the cost and complexity of managing different processes throughout an organization.
The platform, launched in the US 18 months ago, has several key features that include:
- Integrated analytics—this lets organizations embed analytic reports into existing business processes and makes information available to a wide spectrum of users and applications. This feature eliminates the need for separately prepared management reports which are often produced by specifically designated personnel. In other words, the software has the potential to make headcount savings.
- Business process choreography—an IBM term used to refer to the automation of business processes and simplification of task management across compliance applications. In other words, all steps taken in a process are tracked so they are fully auditable with permission and authority levels identified for any decisions needed. This feature gives managers significant flexibility as it will allow a company to completely re-organise a department, or even its business, without losing sight of any business control process.
- Top-down and risk-based control features—these ensure that views and reports are designed to help users understand the status of their entity level controls, and direct their efforts to the areas that present the greatest risk because of their potential impact to financial reporting.
Perhaps unsurprisingly, companies who have successfully implemented the product are very reticent to talk about it. Firstly, because it gives them a competitive advantage but also, crucially, it tends to show up weaknesses in current compliance practice which may have legal implications. Nevertheless, IBM is encouraged by sales take-up in the US and is seeking a similar result from Europe. Whilst much of this success has been driven by the need for regulatory compliance, customers are privately admitting that the improved control that the platform brings to their business processes, both in terms of eliminating human error and, presumably, deviance plus the ability to flag up bottlenecks, is making this a worthwhile tool.
Whilst WBCR may take a lot of the ‘fun’ out of business life—no more arguments about who should have done what by when, its all been tracked—it provides the tightly controlled environment that compliance legislation such as SOX is demanding and should also provide grounds for companies to demand a significant reduction in their audit fees.