Decisions - Case study: Sarbanes-Oxley - The Dotted Line.

(From Financial Director)

Public companies across Europe and the US are devoting a substantial amount of energy and resources to comply with Sarbanes-Oxley, a ruling which forces CEOs and FDs to sign off accounts personally and makes them criminally liable for any misstatements in those accounts.

According to Ian Russell, CEO of Scottish Power, which is listed in both London and New York, his US peers should not look at the regulation as undiluted bad news.

There are undoubtedly specific steps that companies will have to take to ensure there is no opacity in their operating procedures that could give rise to a material misstatement to investors and shareholders. The upside is that reporting procedures should improve, with greater transparency.

With any luck, companies will also find that under Sarbanes-Oxley they will have moved to a position where they have a greater fluency and brevity in their data gathering and consolidation processes, says Russell.

He argues that as they work through the task of carrying out a comprehensive documentation of the organisation's key processes and internal controls, companies will find they are able to streamline or automate a number of activities through the implementation of new or bolt-on financial software systems. This, in turn, will lead to ...