Companies meet deadline to file financial data in new format

September 24, 2009

In January 2009, SEC finalized a rule requiring public companies to use extensible business reporting language, or XBRL, to submit financial information to the agency’s public financial reporting Web site, EDGAR.

During first phase of the three-year process included more than 425 public companies with a worldwide public common equity float in excess of $5 billion.

By 2011, between 10,000 and 12,000 companies are expected to submit statements in XBRL.

Source: http://www.nextgov.com/nextgov/ng_20090921_4858.php?oref=topstory


Corporate Compliance Regulations & Standards

August 27, 2008

More than 8,500 state and federal regulations concern records management in the United States. There are several more voluntary standards that can be adopted. Here is a sampling of some of the more common standards and regulations that concern document and records management.

The Sarbanes-Oxley Act of 2002

Also known simply as “Sarbanes Oxley” or “SOX,” the Sarbanes-Oxley Act of 2002 was passed in the wake of a number of corporate accounting scandals at companies like Enron and Arthur Andersen, which came to light after the year 2000.

Signed on July 30, 2002, the legislation’s goal is to create oversight at publicly traded companies and independent auditors so investors are not fooled by phony profits and revenue. Among the several results of Sarbanes-Oxley is the creation of an oversight board for accounting firms that audit publicly traded companies. It also stresses independence of auditors and financial analysts; addresses corporate responsibility at publicly traded companies; and protects whistleblowers.

At no point does the word “software” appear in the text of the Sarbanes-Oxley legislation. But in order to achieve the type of audit trails and records keeping required to be in compliance, most companies will use some type of content or records management software.

Section 404 of Sarbanes-Oxley is widely cited in the literature of software companies. It requires each annual report of a publicly traded company to contain an “internal control report”, which states the responsibility of management for establishing and maintaining an adequate internal control structure and procedures for financial reporting; and contains an assessment of the effectiveness of the internal control structure and procedures of the issuer for financial reporting.

Section 409 says that companies must disclose information on material changes in the financial condition or operations of the issuer on a rapid and current basis.

To read a summary of the entire Sarbanes-Oxley legislation, visit: http://www.aicpa.org/info/sarbanes_oxley_summary.htm.

To hear webinar on Sarbanes-Oxley legislation, visit:http://www.complianceonline.com/ecommerce/control/trainingFinder?category_id=30008

The Patriot Act

Maligned in some circles for what is perceived to be a pinching of civil liberties, H.R. 3162, better known as the USA Patriot Act, was signed in October of 2001, just over a month after the terrorist attacks of Sept. 11.

While much of the press coverage has gone to provisions in the bill that let law enforcement track what books people take from the library and the like, there are real business issues mentioned in the Patriot Act. And once again, businesses will turn to software in order to solve them.

The Patriot Act will have the most affect on companies in the financial services sector, which will have to comply with parts of the legislation that concern detecting and preventing money laundering that can be used to finance terrorism. Institutions need an automated process for continuous monitoring of accounts with detection filters and to check account holder names against watch lists and suspicious activity. They also need to track investigations in progress, and clear the names of those who have been investigated.

ISO 9000

ISO 9000 quality standards are implemented by more than 500,000 organizations in 160 countries. ISO 9000 is an international reference for quality management requirements in business-to-business dealings.

The ISO 9000 family examines what an organization does to fulfil the quality requirements of its customers and applicable regulatory requirements, while enhancing customer satisfaction, and achieving continual improvement of its performance in pursuit of these objectives.

ISO 9000 is a generic requirement, which means the same standards can be applied to any organization, large or small, whatever its product, even if the product is actually a service, in any sector of activity, and whether it is a business enterprise, a public administration, or a government department.

To hear webinar on ISO and Quality, visit: http://www.complianceonline.com/ecommerce/control/trainingFinder;jsessionid=BF212C0A5D84A8DDABE76CEACB43B217.jvm1?category_id=30004

ISO 15489

ISO 15489 focuses on the business principles behind records management and how organizations can establish a framework to enable a comprehensive records management programme. ISO 15489 is just a framework and is an optional standard that any organization can adopt.

The standard provides a common international language for organizations that record and file material, regardless of the medium or format; the size of the enterprise; the type of organization; or the level of technology used.

DoD 5015.2

The Department of Defense (DoD) 5015.2 standard defines the basic requirements based on operational, legislative, and legal needs that must be met by records management application (RMA) products acquired by the Department of Defense (DoD) and its components. It also defines requirements for RMA’s managing classified records. It has become the de facto standard for records management systems used by U.S. government agencies.

SEC, NASD and NYSE Regulations

In addition to Sarbanes-Oxley, SEC and non-government securities organizations have regulations in place that require strict record keeping by brokers, dealers, and financial services organizations.

Section 17(a) of the Securities Exchange Act of 1934, Rule 17a-4 of the Exchange Act, NYSE Rule 440, and NASD Rule 3110 require the preservation for three years, and preservation in an accessible place for two years, electronic communications relating to the business of the firm, including interoffice memoranda and communications. That includes e-mail and relevant instant-message correspondence.

For more information, see http://www.law.uc.edu/CCL/34ActRls/rule17a-4.html#top.

To hear webinar on SEC and Quality, visit: http://www.complianceonline.com/ecommerce/control/trainingFinder?category_id=30002

HIPAA

The Health Information Portability and Accountability Act (HIPAA) aims to protect personal information about consumer health records. Congress enacted HIPAA in response to the growing use of the Internet and electronic transactions. HIPAA is a privacy law to protect consumers from having their personal health information exploited by insurance companies, employers, and anyone else who may try to exploit, disclose, or publish their personal health information.

For more information, see: http://www.intranetjournal.com/articles/200211/ij_11_29_02a.html

To hear webinar on SEC and Quality, visit: http://www.complianceonline.com/ecommerce/control/trainingFinder?category_id=30007

Federal Information Security Management Act of 2002 (FISMA)

FISMA requires government agencies to provide a framework for for enhancing the effectiveness of information security in the federal government. The head of each federal agency must provide security measures commensurate with the risk and magnitude of the harm caused by potential security breaches, such as unauthorized use, access, disclosure, disruption, modification or destruction of information management systems.

For a more detailed explanation of FISMA, see:
http://www.chips.navy.mil/archives/04_winter/PDF/FISMA.pdf. (PDF file; reader required.)

Source:Intranet Journal


SEC Slaps CPA Firms for Not Registering

July 31, 2008

The Securities and Exchange Commission took action against several small accounting firms and their principals, saying they audited public companies without having registered with the Public Company Accounting Oversight Board (PCAOB).

Each of the firms and individuals consented to the issuance of the SEC orders without admitting to or denying any of the findings.


IFRS and When

July 15, 2008

The SEC may decide soon whether and when U.S. companies will switch to international accounting standards. And it’s a good thing, as panic from not knowing the date is percolating.

The curtain has risen, the band is playing — but when, precisely, will international financial reporting standards (IFRS) take center stage?

That’s the question on the minds of companies, academics, audit firms, and virtually every other entity remotely connected with corporate finance. There is growing speculation that the Securities and Exchange Commission will set a date as early as mid-August, which many say is not a moment too soon.
The move from generally accepted accounting principles (GAAP) to IFRS not only seems to be a foregone conclusion but also appears to have been fast-tracked. Last month, Financial Accounting Standards Board member George Batavik said that several key FASB projects, including lease accounting, financial-statement presentation, and revenue-recognition guidelines, have undergone “dramatic scope change” — that is, a reduction — to ensure that they can be completed by 2011.

Many experts now believe that what was once billed as a “convergence” of U.S. GAAP and IFRS has become essentially a switch to the latter, with 2013 whispered as the likely implementation date.

Given the scope of anticipated changes, that date has touched off a keen sense of urgency. Sue Haka, president-elect of the American Accounting Association and a Michigan State University accounting professor, points out that the number of accounting instructors is dwindling even as the number of accounting majors increases. The availability of textbooks and changes to accounting exams are also key issues affected by a date for IFRS adoption, as is the retraining challenge that audit firms will confront.

And, of course, companies of all sizes will face the same challenge in extremis. “I just can’t imagine the amount of money that’s going to be spent retraining everybody,” says Larry Levine, head of business valuation and corporate finance at RSM McGladrey. “Everybody who touches finance and accounting is going to have to have some kind of reeducation and training.”

Is that a clock ticking, or something more ominous?

Click here to listen webinars on SEC, SOX and Banking and finance related compliance.

Source: CFO.com


About Insider Trading

July 1, 2008

“Insider trading” is a term that most investors have heard and usually associate with illegal conduct. But the term actually includes both legal and illegal conduct. The legal version is when corporate insiders—officers, directors, and employees—buy and sell stock in their own companies. When corporate insiders trade in their own securities, they must report their trades to the SEC.

Illegal insider trading refers generally to buying or selling a security, in breach of a fiduciary duty or other relationship of trust and confidence, while in possession of material, nonpublic information about the security. Insider trading violations may also include “tipping” such information, securities trading by the person “tipped,” and securities trading by those who misappropriate such information.

Who is an insider?

“insider” is any person who, is or was connected with the company, and who is reasonably expected to have access to unpublished price-sensitive information about the stock of that particular company, or who has access to such unpublished price sensitive information.

Information that could be price sensitive includes periodical financial results of a company, intended declaration of dividend, issue or buyback of securities, any major expansion plans or execution of new projects, amalgamation, merger, takeovers, disposal of the whole or substantial part of the undertaking and any other significant changes in policies, plans or operations of the company.

How does insider trading work?

An insider buys the stock (he might also already own it). He then releases price-sensitive information to a small group of people close to him, who buy the stock based on it, and spread the information further. This results in an increase in volumes and prices of the stock. The inside information has now become known to a larger group of people which further pushes up volumes and prices of the stock.

Examples of insider trading cases that have been brought by the SEC are cases against:

  • Corporate officers, directors, and employees who traded the corporation’s securities after learning of significant, confidential corporate developments;
  • Friends, business associates, family members, and other “tippees” of such officers, directors, and employees, who traded the securities after receiving such information;
  • Employees of law, banking, brokerage and printing firms who were given such information to provide services to the corporation whose securities they traded;
  • Government employees who learned of such information because of their employment by the government; and
  • Other persons who misappropriated, and took advantage of, confidential information from their employers.

Source: SEC


Companies Cozying Up to IFRS

June 26, 2008

After years of resistance to a global accounting overhaul, American companies are rapidly coming around to the idea of adopting international financial reporting standards, a new Deloitte survey of finance executives suggests.

Polling executives at 200 companies, Deloitte found that 30 percent of CFOs and other finance officials would consider adopting IFRS within the next three years if given the option by the Securities and Exchange Commission.

The SEC’s decision to accept IFRS filings from foreign companies, and its signaling that the principles-based standards used in much of the world are likely to take hold here, were factors in the change, the accountancy suggested. Now, U.S. firms are busy considering what this will mean for them.

Source:CFO.com


SEC Delays 404(b) Compliance for Small Biz

June 23, 2008

The Securities and Exchange Commission has granted small companies a one-year reprieve with regard to complying with the auditor-attestation requirements of Section 404(b) of the Sarbanes-Oxley Act.

With the extension, smaller companies will now be required to provide the attestation reports in their annual reports for fiscal years ending on or after December 15, 2009.

“The extension of the Section 404(b) compliance date for smaller companies is the latest in a series of Commission efforts to help reduce unnecessary compliance costs for smaller companies while preserving important investor protections,”

Section 404 has two provisions: 404(a) requires company management to assess the effectiveness of the company’s internal controls over financial reporting, while 404(b) requires an auditor attestation on management’s assessment.

Source: CFO.com