News
News
7/20/2005
05:12 PM
Connect Directly
RSS
E-Mail
50%
50%

Study: Centralized Administration Makes Sarbox Easier

The study found that Sarbanes-Oxley is easier for companies with "shared-service" organizations for functions such as accounting, payroll, and human resources.

Companies with centralized administrative functions have had a significantly easier time in complying with the Sarbanes-Oxley Act, according to a study released Wednesday by Deloitte Consulting.

The study found that Sarbox is easier for companies with "shared-service" organizations for functions such as accounting, payroll, and human resources.

More than 82% of respondents said shared services simplified Sarbox compliance, and 45% said shared-services organizations played the lead role in their compliance effort.

Companies with shared-services organizations are well-positioned to undertake the laborious compliance process for Sarbanes-Oxley's section 404, which requires documenting and testing internal financial-reporting controls. "We're seeing an uptick in the number of companies implementing shared services, and Sarbanes-Oxley is one of the main drivers," says Susan Hogan, principal and leader of Deloitte's shared-services practice.

Last year, Sarbanes-Oxley compliance spending totaled $5.5 billion, according to AMR Research, and is projected to rise to $6.1 billion in 2005 as companies add to or improve on their initial compliance efforts.

Shared-services organizations facilitate Sarbox compliance by concentrating financial processes in fewer locations, Hogan says. One Deloitte client had its accounting functions spread out over 300 locations, she says. "It's hard to keep track of controls when you have 300 locations."

Shared services also makes it easier to justify investments in labor-saving technology such as imaging and workflow software that's needed to test and document controls.

Still, moving to a shared-services environment poses a formidable consolidation challenge for large, diversified companies with multiple enterprise-resource-planning systems. As an alternative to standardizing on a single system, companies are adopting Web-based middleware to bridge these multiple systems, the Deloitte study says.

Deloitte surveyed shared-services executives in 115 companies around the world. About half of the companies had annual revenue of $5 billion or more, and 25% had annual revenue of more than $15 billion. Two-thirds of the shared-services organizations had been in place for at least two years.

Comment  | 
Print  | 
More Insights
The Business of Going Digital
The Business of Going Digital
Digital business isn't about changing code; it's about changing what legacy sales, distribution, customer service, and product groups do in the new digital age. It's about bringing big data analytics, mobile, social, marketing automation, cloud computing, and the app economy together to launch new products and services. We're seeing new titles in this digital revolution, new responsibilities, new business models, and major shifts in technology spending.
Register for InformationWeek Newsletters
White Papers
Current Issue
InformationWeek Tech Digest - August 20, 2014
CIOs need people who know the ins and outs of cloud software stacks and security, and, most of all, can break through cultural resistance.
Flash Poll
Video
Slideshows
Twitter Feed
InformationWeek Radio
Sponsored Live Streaming Video
Everything You've Been Told About Mobility Is Wrong
Attend this video symposium with Sean Wisdom, Global Director of Mobility Solutions, and learn about how you can harness powerful new products to mobilize your business potential.