SunTrust Banks May Not Make Sarbanes-Oxley Deadline - InformationWeek

InformationWeek is part of the Informa Tech Division of Informa PLC

This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them.Informa PLC's registered office is 5 Howick Place, London SW1P 1WG. Registered in England and Wales. Number 8860726.

IoT
IoT
Business & Finance
News
11/15/2004
12:11 PM
50%
50%

SunTrust Banks May Not Make Sarbanes-Oxley Deadline

Problems with how loan-loss reserves are calculated are unlikely to be corrected by Dec. 31.

Problems with how SunTrust Banks Inc. calculates loan-loss reserves will likely prevent the company from meeting Sarbanes-Oxley Act reporting requirements this year.

Last week three SunTrust employees were fired in connection with accounting irregularities--deficiencies in the bank's method of determining loan-loss reserves--uncovered by an internal investigation. The bank restated its earnings upward for the first half of the year because of the discovered irregularities.

The investigation revealed "inadequate control procedures, insufficient documentation, and a failure to detect errors in our loan-loss calculations," SunTrust chairman and CEO Phillip Humann said in a conference call last week.

The three terminated employees, including the bank's chief credit officer, belonged to its credit-administration division. In addition, the bank's controller was reassigned to a position not related to financial reporting.

SunTrust said it's unlikely the deficiencies will be corrected by Dec. 31, which means it will be unable to state in its 2004 annual report that its internal control over financial reporting is effective, as required by the Sarbanes-Oxley Act.

Beginning Nov. 15, companies must, under Sarbanes-Oxley's section 404, include a statement attesting to the effectiveness of internal controls over financial reporting with their 2004 annual reports. That entails a heavy commitment of IT resources dedicated to documenting and testing the business processes that directly contribute to a company's financial statements.

Those demands are taking a heavy toll on IT budgets. According to a survey released last week by AMR Research, technology spending devoted to achieving Sarbanes-Oxley compliance will grow from $1.1 billion this year to $1.6 billion next year. Sarbanes-Oxley is chewing up 42% of compliance-related IT spending. More than a third (36%) of companies plan to increase Sarbanes-Oxley spending next year.

Among the biggest spending areas are document and records management, internal and external security, business-process management, and compliance-management software.

We welcome your comments on this topic on our social media channels, or [contact us directly] with questions about the site.
Comment  | 
Print  | 
More Insights
2020 State of DevOps Report
2020 State of DevOps Report
Download this report today to learn more about the key tools and technologies being utilized, and how organizations deal with the cultural and process changes that DevOps brings. The report also examines the barriers organizations face, as well as the rewards from DevOps including faster application delivery, higher quality products, and quicker recovery from errors in production.
News
Think Like a Chief Innovation Officer and Get Work Done
Joao-Pierre S. Ruth, Senior Writer,  10/13/2020
Slideshows
10 Trends Accelerating Edge Computing
Cynthia Harvey, Freelance Journalist, InformationWeek,  10/8/2020
News
Northwestern Mutual CIO: Riding Out the Pandemic
Jessica Davis, Senior Editor, Enterprise Apps,  10/7/2020
Register for InformationWeek Newsletters
Video
Current Issue
[Special Report] Edge Computing: An IT Platform for the New Enterprise
Edge computing is poised to make a major splash within the next generation of corporate IT architectures. Here's what you need to know!
White Papers
Slideshows
Twitter Feed
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.
Sponsored Video
Flash Poll