sox

RecWizard helps with Sarbanes-Oxley compliance.

There are many facets to the Sarbanes-Oxley Act, but one of the main requirements is for the specific attesting to the existence and adequacy of internal controls. This is required of senior management AND the external auditors.

The period end account reconciliation process is often a key element to those controls. Here is what RecWizard can do to make your reconciliation process complete, accurate, clearly documented and easily auditable.

  • Policies and procedures are clearly documented and are easily accessible to the reconciler at all times.
  • User IDs are set up at different authority levels to Prepare-Review-Approve reconciliations and are electronically signed to show various levels of review and approval.
  • Management of the total reconciliation process is enhanced by real-time status reports to use for determining the completeness of the accounting close process before releasing financial results.
  • Templates for five different types of reconciliations are available and result in consistent disclosures and formats for all reconciliation information.
  • The complete tutorial is always readily available to users. The tutorial helps in the training process for new employees on how to use RecWizard, and it also emphasizes good account reconciliation practices of analysis and documentation.
  • This complete process is documented and available to be reviewed by your auditors easily and efficiently anywhere anytime.

You can find answers to all your questions about RecWizard here on our web site. You can also fill out an info request and we'll call to set up a live demonstration and show you the features that make good accounting sense, and makes SOX compliance an afterthought.

Click here to go to the info request form now.

Below is our abbreviated analysis of the Sarbanes-Oxley Act. If you haven't read the Act or want to know more about it's general requirements, read on. It will take about 5 minutes, but you'll know what the overall objectives of the Act are, not just the current buzz phrase of "404 compliance".

Who are Sarbanes and Oxley?

Paul Spyros Sarbanes - Democrat - was a senator from Maryland. He was the longest-serving senator in Maryland history having served from 1977 until 2007.        ------------>>>


<<<------------      The other sponsor of the landmark legislation now known as Sarbox is Michael Garver Oxley - Republican. He served in the House of Representatives from 1981 unitl 2007.

What is the Sarbanes-Oxley act of 2002?

Ten years ago the 107th Congress of the United States passed the Sarbanes-Oxley Act of 2002 ("Sarbox"). This law was enacted by the U.S. government to help restore investor confidence after the Enron and MCI financial scandals.

Sarbox addresses many areas of accounting, financial reporting, and investment company relations. While we will not attempt to describe this Act in depth, here are the main points:

  • Public Company Accounting Oversight Board - this board will be established to register public accounting firms that audit public companies. The board will also establish rules for auditing, ethics and quality control of those firms.
  • Auditor Independence - the public accounting firm auditing the company must follow certain rules regarding reporting to the audit committee and rotation of the partner in charge. In addition, certain non-audit services may not be provided by the auditing firm, including:
    • Bookkeeping
    • Financial information system implementation and design
    • Appraisal or valuation services
    • Actuarial services
    • Internal audit outsourcing services
    • ... and several other management services
  • Corporate Responsibility - the principal executive and financial officers of the company must certify in each annual and quarterly filing with the SEC that:
    • The signing officer has reviewed the report
    • The report does not contain any untrue statement of a material fact
    • The financial statements fairly present the financial condition of the company
    • The signing officers-
      • Are responsible for establishing and maintaining internal controls
      • Have designed internal controls to ensure that material information is made known to such officers
      • Have evaluated the effectiveness of internal controls within 90 days prior to the report
      • Have presented in the report their conclusions about the effectiveness of their internal controls
      • ... and several other internal control related disclosures
        • This is where RecWizard provides assistance in not only supporting and maintaining internal controls, but also in documenting these controls. Click here to find out how.
  • Enhance Financial Disclosures - this section states that new rules will be issued regarding such matters as:
    • Disclosure of off-balance sheet transactions
    • Pro Forma financial information
    • Enhanced Conflict of Interest provisions
    • Disclosures of transactions involving management and principal stockholders
    • Reporting on Management's Assessment of Internal Controls
    • Code of Ethics for Senior Financial Officers
  • Analyst Conflicts of Interest - new rules will be developed to foster greater public confidence in securities research, and to protect the objectivity and independence of securities analysts.
  • Corporate and Criminal Fraud Accountability - criminal penalties are defined for destruction, alteration or falsification of records by the company or by the auditors.
  • White Collar Crime Penalty Enhancement - various fines and imprisonment periods have been increased for existing crimes. Criminal penalties for falsely certifying financial statements by principal executive and financial officers are defined.
  • Corporate Fraud Accountability - adds possible fine and imprisonment for altering, destroying or concealing documents with the intent to impair the object for use in an official proceeding, or to otherwise obstruct any official proceeding. In addition, the United States Sentencing Commission is requested to review the sentencing guidelines applicable to securities and accounting fraud and related offenses. Section 32(a) of the Securities Exchange Act of 1934 is amended by striking "$1,000,000, or imprisoned not more than 10 years" and inserting "$5,000,000, or imprisoned not more than 20 years".

If you want to download your own copy of Sarbox, you can get it at FindLaw. Go to their web site by clicking on their logo...

This link to FindLaw will take you a .pdf file of the actual published law - all 66 pages of it.

How does RecWizard help with Sarbanes-Oxley?

While good accounting controls and procedures have always been important to well managed companies, Sarbox now requires specific statements to be made by principal officers of the company attesting to the completes and adequacy of the company's internal controls.

RecWizard provides a tool that will help you meet many of the internal control documentation and financial statement accuracy requirements.

  • Documentation of levels of Prepare-Approve-Review - unique user names and passwords are used to identify the completion of each step in the account reconciliation management process. As you can see, three different people have been involved in the reconciliation of the following account:

  • Financial Statement Accuracy - RecWizard provides a tool to easily prepare, access and review General Ledger account reconciliations to make sure they are completed properly and in a timely manner. Here is a sample of the General Ledger Reconciliation Summary Report:


As you can see, the report shows the last date that your accounts have been reconciled, and what may still exist as an Unidentified Difference. It also shows the level of approval using the hierarchy of Prepared - Approved - Reviewed.

With installation over a networked system, you could even open each reconciliation for review purposes.

  • Adherence to Company Policies - RecWizard allows you to input your company's policies into the database so they are available with the click of your mouse every time you prepare a reconciliation. No need to look in a different place for the policies and procedures manual and no excuse for not knowing what the policy is. Here is a sample of the Account Setup screen that is accessible every time the account is reconciled by clicking on a tab:

While this example has only a brief excerpt of the company policy specifically targeting the preparation of this reconciliation, you could add your complete policy to the RecWizard database. Or, you could provide a link to your intranet site that houses your accounting policies so it is easy for your staff to locate the appropriate policy in detail.

You can also see that you can identify Key Control Accounts for special attention and even create a reference to your Consolidation accounting system (such as Hyperion or Cognos) to provide an extra level of review and summarization.

What do you do now?

If you think RecWizard can help you improve your accounting and internal controls, then you can do one of the following (or all of them, if you like):

  • Contact Us to discuss detailed implementation of a company wide program.
  • Go to the Videos page to watch an overview video or run through our PowerPoint presentation.
  • Continue searching our site and make sure you review our Tutorial.
  • Read through the Features page to get more detailed descriptions of what RecWizard can do.
  • Fill out an Info Request to have us get in touch with you.

We hope this information has been helpful and that your efforts to comply with Sarbanes-Oxley include RecWizard.