Now that companies have completed their initial Sarbanes-Oxley Section 404 certification, Ventana Research believes the next step is for them to focus on achieving sustainable, efficient compliance with the law. In our judgment, investments in this effort can reduce the administrative burden and, of equal importance, reduce the possibility of inadvertent but costly errors. Tools such as Geac’s newly updated compliance management system can be of considerable help.
As U.S. public companies enter the second phase of living with Sarbanes-Oxley Section 404, Ventana Research recommends they find ways to achieve sustainable, efficient compliance. Particularly now that the Public Company Accounting Oversight Board has made it clear to auditors they should focus on the big picture rather than on petty details, we believe companies can achieve a positive return on investment from their efforts to streamline internal and external audit functions. There are several dimensions to this effort, but using software to manage compliance execution and documentation is a cornerstone of any such initiative. A software-based system faithfully manages all steps of the process. The deployment of such a system demonstrates to external auditors that a rigorous process exists. It also ensures ongoing monitoring is taking place and creates an audit trail to confirm the appropriate actions were taken when they should have been.
We urge companies not to cobble together compliance management solutions using spreadsheets and word processing attachments to e-mails. This approach may initially appear to be more affordable, but ongoing costs (measured in hours spent by employees) are high. Instead of providing ways to decrease external audit costs as Geac and similar solutions do, the cobbled-together approach creates potentially costly external audit issues. Moreover, this use of spreadsheets, e-mail and word processing cobbled together creates a system prone to failure.
Geac has released the latest 5.1 version of its compliance management system. This new release offers additional refinements in process management, more built-in reporting features and more ways to enhance external audit efficiency. Geac’s Compliance Management application works with any ERP system, although built-in features give users of its own ERP systems easier integration into finance process execution.
The compliance software market is still in its infancy and is highly fragmented. At the moment, market development rather than market share is the most influential factor driving license revenues. Ventana Research expects Geac will focus its marketing effort on its installed base. In the Ventana Research Audit and Control research study conducted last year, we found most finance executives have a high degree of interest in compliance software but a very limited understanding of it. Geac’s primary task in penetrating the market is generating awareness and demonstrating that its users realize a positive return on their investment.
Ventana Research recommends that U.S. public companies explore and implement automated compliance management systems to support their Sarbanes-Oxley-related risk control efforts. Corporations in the market for compliance solutions, particularly those using Geac’s ERP systems, should consider Geac’s solution.
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