by Glenn Cheney

New York -- The Sarbanes-Oxley Act has generated trepidation throughout the corporate and accounting sectors.

The act’s requirements are often vague, myths abound, learning curves are steep, rules and the rule-making processes are in flux, and everybody’s concerned -- if not scared -- about doing it wrong.

Sensing fear and confusion in boardrooms and at audit firms, the American Institute of CPAs and the Institute of Management Accountants have geared up Web-based programs designed to help concerned accountants and corporate officers find out what they need to know to stay out of jail.

The AICPA Audit Committee Toolkit is part of the institute’s Audit Committee Effectiveness Center Web page. The center includes a list of qualified professionals who are willing to serve as financial experts on audit committees. It also offers an “e-alert” system that informs subscribers of developments relating to governance and reporting.

John Morrow, AICPA vice president of new finance, and author of the institute’s Audit Committee Toolkit, saw the vehicle as a necessity in the era of Sarbanes-Oxley.

“Because of the new demands on audit committees created by the Sarbanes-Oxley Act, their increased responsibilities and heightened exposure, we created the toolkit to give them a roadmap to do what they need to do to get through their new requirements and give them good practical guidance,” he said.

The toolkit consists of various bodies of information, sets of questions, step-by-step procedures, and decision-making matrices. It is available to the public, at no cost, at www.aicpa.org/audcommctr/tool­kits/home­page.htm. It can be downloaded as a Microsoft Word document that can subsequently be customized to fit specific companies.

Robert M. Tarola, chief financial officer of W.R. Grace & Co., said, “I don’t think audit committees have had a hard time meeting their obligations under Sarbanes-Oxley or under prior law,” he said. “I think, however, in this world, they need to better document how they discharge their duties.”

Morrow pointed out that nonpublic and not-for-profit companies, which need not comply with the Sarbanes-Oxley requirements for public companies, could also make use of the institute’s toolkit to ensure that their internal control processes are adequate, as well as adequately documented.

Morrow expects auditors to use the toolkit as well, if the Public Company Accounting Oversight Board moves to require them to assess the effectiveness of audit committees. The toolkit would help them track the many actions that clients are expected to take and the documentation that they are expected to produce.

“If the PCAOB issues a rule on assessing effectiveness, there will have to be a body of reference for that assessment,” Tarola said. “Given that the toolkit is endorsed by the professional society, it is likely to be one of those bodies considered.”

While the AICPA’s Web site is positioned as a procedural how-to, the IMA’s new Sarbanes-Oxley Knowledge Network puts a stronger emphasis on communication among professionals. Besides offering a library of information, the site serves as a central organizing point for exchanges of e-mail, advice and opinions. Users can direct specific questions — anonymously, if preferred — to resident expert Jorge Guerra, an IMA consultant and professor of corporate and international finance at Sacred Heart University, who developed the site.

The site — www.imaknowledge.org/sox — was developed rapidly, moving from conception in July 2003, through launch on Dec. 1, 2003. The site is open to the public at no cost until Feb. 1, 2004, after which IMA members and nonmembers will need to pay an annual subscription fee of $299.

The institute was delighted to see nearly 600 people access the site within 48 hours, and the number grew to almost 1,400 by mid-December. Only half of the registered users were IMA members. Guerra said that the rush was due to the impending date of June 15, 2004, after which all annual reports must meet the requirements of Sarbanes-Oxley Section 404, which requires strict and well-documented internal controls.

Guerra recommended that first-time users of the site begin educating themselves by browsing through the site to see what kinds of information are available and where they can be found.

“We have populated information with all legislation applicable to Sarbanes-Oxley with guidance from reputable legal firms throughout the country, and articles and opinions given by many individuals and organizations,” Guerra said. “The site can be searched for such topics as audit committees, auditors, corporate governance, corporate scandals and so on. Then, if you have a question on one subject, you can write to the subject matter expert. Questions will usually be answered within two or three business days. We also have an e-mail exchange that permits members to post a question and ask for feedback from other users.”

Guerra added that these three areas of the site give financial officers access to information, specific answers and wide surveys of opinions.

Kathleen Dey Kraemer, IMA vice president of marketing and membership, explained that the Knowledge Network was born out of a need perceived by the IMA to be aggressive in its commitment to offer products and services that attract top-notch professionals to the association. Kraemer saw the Sarbanes-Oxley legislation as a “meaty issue” and a “very significant opportunity” to provide financial professionals with information and a context for communication within the IMA.

Kraemer acknowledged that the AICPA site offers a good body of literature but says that the Knowledge Network is unique in its ability to allow interaction and expert guidance.

“The issues that the AICPA focuses on are mostly the nuts-and-bolts accounting issues, whereas Jorge brings to the table the ability to focus on higher-level strategic issues,” Kraemer said. “Through a vast amount of interaction, I think we’ll be able to provide something that looks like implementation check lists — not detailed task lists but strategic questions that need to be asked and preparations that need to be made.”

Guerra reiterated that, just as Sarbanes-Oxley is only a first step toward better corporate governance, the current content of the Knowledge Network site is just the beginning of a broader IMA approach to preventing corporate financial scandals.

“What we are trying to do is provide members with the big picture of corporate governance, not only Sarbanes-Oxley, and place it in context,” Guerra said. “Every day we are seeing a new scandal in the headlines. I’ve made a study of 120 scandals involving 150 companies, and in all but about 2 percent of the cases, all these scandals involve executive management and boards. Our goal is to guide the financial community to a solution to these problems, rather than offer the patchwork remedies that were tried in two previous corporate governance crises in the 1980s and 1990s ... . We want to go beyond Sarbanes-Oxley and talk about the entire corporate governance issue. Section 404 is the pressing issue ... but we don’t want to stop there.”

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