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Section 404 of the Sarbanes Oxley (Sarbox) Act requires auditors to sign-off internal control processes as well as the actual accounts. Non compliance with the Act could send directors to jail. This has undoubtedly been a major factor behind the number of applications which automate internal control processes that have been coming to the market. Financial managers are increasingly willing to turn to automated solutions to handle processes that will live up to the auditors’ scrutiny.
But a survey released this month by Accenture revealed that over 300 information technology and finance executives, from US businesses with revenues of at least $1billion, have not been entirely satisfied with the offerings to-date. They want better and more efficient tools to create and manage accounting records. The survey also found that 90% of respondents believed that their IT and finance departments have been achieving high levels of co-operation to meet Sarbox requirements.
The latest offering from Movaris therefore seems timely. The Movaris OneClose solution is the first to link internal controls with the generation of financial statements. In what Movaris terms the “last mile of finance”, the company has recognized that closing off accounts calls for large amounts of data that is usually handled within spreadsheets and Word documents, backed up by telephone calls and emails to address outstanding queries. With little automation of these processes, it is an area where mistakes can easily occur.
Error checking is a time consuming and tedious process required when there are tight deadlines to publish company figures. Movaris OneClose solves these problems by providing finance executives with a real-time overview of the internal control processes used in compiling the financial reporting inputs. Meanwhile the application’s Close Task Manager documents, standardizes and automates the book closing processes. This improves the accuracy of the final figures whilst saving time and effort over more informal methods.
Many will argue that Sarbox legislation continues to be hugely expensive for companies forced to spend on solutions that were previously deemed unnecessary. Despite this, some real benefits finally seem to be emerging. IT and finance functions are working together at unprecedented levels and solutions are beginning to emerge that significantly tighten up internal control processes. The types of failings that led to the need for Sarbox legislation in the first place have become harder to disguise.
It has taken some time to reach this point but UK companies affected by Sarbox legislation do not have to be section 404 compliant until July 2006. They are well placed to take advantage of the applications now emerging from the US.