systems-risk-management firm and a major law firm have formed a joint venture to perform compliance audits for clients looking for year 2000 insurance. The audits can assure worried execs--and skittish shareholders--that an IT organization has the computer date-field problem well in hand.
The partnership, called 2000 Secure Audit Co., involves Ascent Logic Corp., which has built a year 2000 practice based upon its history of providing risk assessments for complex projects such as weapons systems, and LeBoeuf Computing Te
chnologies LLC, a year 2000 risk-assessment unit of the New York law firm of LeBoeuf, Lamb, Greene & MacRae LLP.
2000 Secure Audit performs year 2000 compliance audits for potential clients of J&H Marsh & McLennan looking for year 2000 insurance. The insurer, which offers year 2000 coverage plans for as much as $200 million, already has six prospective clients undergoing initial audits by the new firm.
The insurance covers losses and liabilities related to year 2000 problems. The larger benefit, says Larry McArthur, CEO of Ascent, in San Jose, Calif., may be in the message that a publicly held company is sending to stockholders by undergoing an independent audit and taking out insurance. "It will make the stockholding public happy," he says.
Without the audit, stockholders may fear that a company's year 2000 problem is not being adequately addressed, McArthur says. The audit can also help protect a company against stockholder lawsuits filed when there are suspicions that a company did not fully d
isclose a problem that caused a drop in the stock's value.
Step By Step
The audit firm's first step is to make sure the prospective insurance client has assessed its year 2000 compliance issues, developed a project plan, and engaged a year 2000 vendor capable of carrying out the project, McArthur says. The prequalification audit can be done in about two weeks for about $65,000.
The audit firm then uses a modified version of Ascent's Year2000Plus software and methodologies to develop a dependency model for the prospective client. This model helps to identify where the risks are, whether inside the company or among its business partners. Ascent's software is installed at corporate headquarters and at every location with a year 2000 project, providing a reporting mechanism that interacts with Microsoft Project software and permits comparisons between the project work and the risk model.
That work can take several months and cost hundreds of thousands of dollars, according to McArthur. Af
terward, monitoring is conducted for about $30,000 a quarter until the project is completed.
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systems-risk-management firm and a major law firm have formed a joint venture to perform compliance audits for clients looking for year 2000 insurance. The audits can assure worried execs--and skittish shareholders--that an IT organization has the computer date-field problem well in hand.
