Turbo Charge Your SOX Program With the New COSO Monitoring Guidance
Are senior executives taking full advantage of monitoring their organizationís internal controls and determined that the monitoring is effective?July 8, 2010
by Stephen Austin, CPA
It’s a little hard to believe, but we have been living with the Sarbanes-Oxley Act (the “Act”) for almost a decade. Since 2002, Boards of Directors, Audit Committees, Senior Management and their independent registered public accountants have been learning and embracing the COSO Internal Controls — Integrated Framework and Section 404(a) and 404(b) of the Act. In many public companies, it is now part of the “fabric” of their corporate systems. Like the ISO standards, SOX compliance has become an integral part of the U.S. corporate culture.
There is ample data to suggest that it has reduced a certain degree of accounting fraud and restatements over the last decade. This has not come without a substantial economic cost to U.S. registrants … both in terms of time, effort and dollars.
Today, we are an economy disturbed by a continuing stream of accounting irregularities and fraud discovery. The U.S. experiences global embarrassment over its failure to reduce corporate scandals and the poor judgments that gave rise to the recent financial meltdown. Perhaps we need to assess how to make SOX more robust and effective by timely identification of internal control problems and new cases of financial fraud.
Time to Step It Up
In January, 2009, COSO introduced new guidance on how to significantly enhance the monitoring of internal controls. While this guidance is just guidance, there are some very important messages that Boards of Directors, Audit Committees, CPAs and CFOs should grasp:
The New Monitoring Guidance — Four Steps
COSO continues to provide outstanding tools that should be embraced in order to sustain an effective reliable U.S. reporting system and provide the kind of ethical leadership needed in today’s global economy.
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Stephen G. Austin, CPA, MBA, services audit and business consulting engagements with a focus on technology, manufacturing, telecom, software, drug discovery and medical device companies. He is the author of the book, Rise of the New Ethics Class, with a focus on Sarbanes-Oxley regulations. Prior to joining Swenson Advisors, LLP he had over 22 years of experience as an Audit Partner with Price Waterhouse LLP, and with McGladrey & Pullen, LLP serving both public and private companies. While at Price Waterhouse, Austin worked in the New York National Office, where he addressed complex accounting and reporting issues for companies, including ESOPs, software cost capitalization, business combinations, income taxes and leading edge business transactions. He has experience with emerging, middle market, and large private and public companies. He has significant IPO and secondary offering experience with high technology, biomedical, software and real estate companies. Austin is a CPA in California and Georgia and is a member of the California Society of CPAs and the AICPA.