February 18, 2010
Vibato Releases SOX Basic® for Small Companies
Vibato, a provider of Sarbanes-Oxley and SAS-related compliance solutions, has announced the release of SOX BASIC for small companies, delivering a size-specific SOX implementation to smaller reporting companies in just one day.
SOX BASIC is designed specifically for companies with fewer than 25 employees, or who need fewer than 20 internal controls to meet their compliance requirements. SOX BASIC includes the following key features:
- Support, including consulting time to perform the implementation and to help set up a controls testing plan;
- Risk assessment, measuring both quantitative and qualitative factors for determining in-scope processes and identifying the high-risk areas of the business;
- Segregation of duties analysis, analyzing 304 unique segregation conflicts, and identifies the specific resources affected along with suggested remediation strategies;
- Integrated testing and documentation, including test plans and every policy, checklist, form, and other documents necessary to execute each control as written; and
- Control matrix, supporting up to 20 predefined best-practice controls available from the 17 process cycles currently offered by Vibato, covering all key areas of the business.
SOX BASIC is also available for licensing by financial services and public accounting and consulting firms looking for a different approach to assisting their existing and potential clients with their compliance objectives.
Posted by: jjaeger @ 12:24 pm
Read the full article here.
March 3, 2010
Vibato Introduces SOX BASIC for Small Public Companies
By Staff
2010 MAR 6 - (VerticalNews.com) -- Vibato, the only provider of the fixed-price, best-practice, modular approach to meeting Sarbanes-Oxley (SOX) and SAS-related compliance requirements, announced the release of SOX BASIC(R). This revolutionary approach to SOX compliance delivers a size-specific SOX implementation to smaller reporting companies in just one day, and for less than $6,000, a fraction of the cost of competing alternatives and a compelling solution for this under-served segment of the market.
The latest SEC report, "Study of the Sarbanes-Oxley Act of 2002 Section 404 Internal Control over Financial Reporting Requirements," estimates the average cost of outside vendor assistance for companies with less than $75M market capitalization for their 2008 fiscal year to be approximately $82,000 for initial implementation (table 8, pg. 44). This is the result of the traditional time-and-materials approach to scoping and implementing a SOX engagement, but does not align with the budget and resource constraints faced by many smaller public companies today.
With the rapidly approaching deadline of June 15, 2010 for the auditor attestation of internal controls or SOX Section 404(b), non-accelerated filers need a reasonable solution that fits their budget, level of resource availability and ongoing maintenance requirements.
For the first time, a fully-integrated, best-practice approach to establishing and documenting internal controls for smaller public companies, as well as startups or larger companies with smaller initial requirements, is available in the form of a comprehensive toolset that can be implemented in one day and for a fixed price.
"We were impressed with the rapid implementation, thorough integration and cost-effective approach delivered in the SOX BASIC toolset from Vibato," said Rod Meisel, corporate controller, Cereplast, Inc. "The initial implementation was a very straightforward process. It got us on the right track for our year-end audit and met our budget constraints."
View the full article here.
Functioning internal controls = cleaner financials and less rework which is not value added. I'm not the only person saying this...
From CFO.com:
Restatements on the Decline
Sarbox and a more tolerant SEC may be why companies are restating financial results less frequently, says a new report.
Alix Stuart - CFO.com | US
March 4, 2010
The number of financial restatements fell in 2009 for the third year in a row, according to a new report. The report, by research firm Audit Analytics, posits that the Sarbanes-Oxley Act and the Securities and Exchange Commission are behind the decline.
Overall, 630 companies filed 674 restatements last year, says the report, representing a 27% decline from 2008. The number of restatements peaked in 2006, when 1,564 companies filed 1,795 restatements (see chart below).
The severity of restatements also declined, at least for companies listed on major stock exchanges. Last year 232 such companies restated, losing an average of $4.6 million from net income. That was down from 301 companies and $7.2 million in 2008 and 389 companies and $8.6 million in 2007. The change in average size is even more dramatic compared with 2002, when restatements reduced net income by an average of $76.5 million per company.
For 30% of those 232 companies, the restatement had no impact at all on net income, while for 16% it had a positive effect, according to the report.
"There are a lot of restatements out there, but sometimes the consequences just aren't as dramatic as you think," says Donald Whalen, director of research at Audit Analytics and author of the report.
The report attributes the decline in restatements to two factors: improved internal controls as a result of Sarbox, and a 2008 recommendation by the SEC's Advisory Committee on Improvements to Financial Reporting that the agency relax its requirements on what types of errors should trigger restatements.
"Frankly, I was pleasantly surprised," says Dennis Beresford, an accounting professor at the University of Georgia's J.M. Tull School of Business and a member of the CIFR. "It's always hard to know exactly what the reasons were, but I'd like to think it was a combination of better financial reporting, better auditing, and hopefully a little more reasonableness in terms of applying materiality [as to what needs to be restated]."
Audit Analytics's data suggests that restatements are getting faster and perhaps procedurally easier as well. For the 630 companies, it took an average of 10.4 days between when they first announced the need to restate and when they filed the restated numbers, down from 17.6 days in 2008 and 20 days in 2007. Also, the average number of issues addressed by a restatement has steadily dropped since 2005, from 2.43 to 1.48 in 2009, and the restatements have covered a progressively shorter time span.
The reasons companies are restating didn't change dramatically from previous years. Debt, quasi-debt, warrants, and equity security issues collectively remained at the top of the list, followed by expense-recording issues and cash-flow classification errors (the latter moved up from ninth place in 2008).
Not surprisingly, the majority of companies issuing restatements - 374 of the 522 U.S.-based restaters - were nonaccelerated filers, smaller companies that don't yet need to conform to auditor reviews under the internal-controls provision of Section 404 of Sarbox. But there may be practical reasons for that result as well. One, there are more nonaccelerated filers than accelerated ones, and two, "the same complicated accounting rules that apply to the big boys apply to them, and they don't have quite the same tools and staff, so it's just statistically more likely they'll have problems," says Beresford.
To be sure, investors didn't necessarily turn a blind eye to restatements, and some companies paid a big price as a result. For example, Huron Consulting Group saw its stock price drop from $44.35 to $13.69 the day after it announced it would restate its three previous fiscal years and the first quarter of 2009. The resulting drag on its share price in fact triggered a $106 million goodwill write-down last year, the company recently disclosed.
Read the full article here.
Get out!
How to Take the Risk Out of IPOs |
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March 2, 2010
By Paul Ausick, Contributing Editor, InvestorPlace |
The market for IPOs appears to be getting better in the US. In 2008, just 43 new listings were offered; in 2009 the number went up to 63. So far this year, there are more than 100 companies lined up to go public.
Initiating, and completing, an IPO is as much a matter of market timing as it is anything else. A company's product may be a world-beating, game-changing innovation, but if the market is scared of something, anything, an IPO may come out at a lower price or it may be cancelled altogether.
Right now, markets are cautious as the signs of a global economic recovery waver from promising to weakening. The US unemployment rate isn't getting any better, but trade balances are because the dollar is getting weaker.
One thing that may be helping the market for US IPOs is the perceived increase in transparency resulting from the 2002 Sarbanes-Oxley Act. Where SarbOx was once blamed for sending IPOs to London or Shanghai, now the effects of the act enhance the US's position as a leader in improving corporate transparency and governance.
It's also true that a listing on a US exchange gives a company access to the most liquid market in the world, as well as the prestige that goes along with a US listing. From year-ago lows, the S&P 500 index has increased by about 60%. The index fell from mid-January to mid-February, but has begun to recover its upward movement. That's good news for the IPO market.
Generally speaking, the projected US budget deficits should work to increase interest rates and lower investment. Some economists argue that the deficits crowd out private investment by making US debt more attractive. Ultimately this leads to inflation.
However, in the unusual case that we're living in now with interest rates near zero, the Federal Reserve cannot lower rates any further as the economy expands. That makes cheap money available for more private investment.
Investing in IPOs depends both on current and projected interest rates more than anything else. Are equities closer in value to bonds or is money closer in value to bonds? If the answer is equities, then government deficits don't crowd out private investment, government spending crowds into the market, actually stimulating private investment.
Taking a risk on an IPO today isn't much of a risk at all, really. Of course the share price may go up or down as the company performs or fails to perform. But an IPO bet today has a much better than even chance of making money for investors.
Read the original article here.
China is going great. Shanghai is FREEZING cold right now but not snowing.
I am really enjoying my time here with the Intech - Detron & Worldwide Energy and Manufacturing Corp USA teams. Mindy Wang, VP Finance of Worldwide Energy is absolutely amazing and a true success story.
This is my second time implementing our product, SOX Compliance Made Simple®, in China and once again I am amazed at how versatile our controls are. Our best-practice controls not only span industries but also countries. I went in to Intech - Detron today with 20 of our predefined, controls and they fit right in without issue. Intech - Detron believes the controls we put in place today will help with their ISO 9000 requirements as well.
This trip has also allowed us to create some very nice forms, checklists, 302 certifications, and policies written in Mandarin which I will blog about when I return and that we will offer for free download. Check back soon!
Vibato is delighted to announce the win of a full HIPAA implementation with a national insurance firm who specializes in the following products & services:
- Alternative Risk Financing and Risk Transfer
- Captive Formation and Management
- Directors & Officers / Employment Practices Liability
- Errors and Omissions
- Executive Benefits
- Fiduciary / Crime
- Health and Welfare Plans
- Intellectual Property
- Key Person Coverage and Business Perpetuation Planning
- Life, Disability and Long Term Care
- Personal Insurance and Individual Risk Management
- Products Liability
- Professional Liability
- Program Formation and Management
- Property Conservation
- Retirement Savings and Planning
- Risk Management Services
- Self-funded Benefit Plans
- Self-insurance Groups
- Surety
- Wealth Management
- Workers Compensation
- Claims Advocacy and Loss Mitigation
- Client Communications
- Contract Review and Analysis
- EPIC Seminar Series
- Job Site Safety Services
- Risk Control and Loss Prevention
We are delighted to participate in this project!
The PCAOB rejected an application from Price & Gartrell, P.C. to become a public accounting company. The reason for the rejection is as follows:
PCAOB NO.1 02-2009-006
December 3, 2009
Basis of Disapproval
12. The Board has considered the following information, which includes information obtained by the Board in connection with Price's application as well as the requirements of the Act and the Board's rules -
a. On or about August 17, 2009, Price certified the financial statements, including the balance sheet and income statement, of Indiana Merchant Banking & Brokerage Company, Inc. ("Merchant"), a registered broker-dealer, for the fiscal year ended June 30, 2009, which Merchant subsequently filed with the Commission.
b. Section 17(e) of the Securities Exchange Act of 1934, required that the balance sheet and income statement filed with the Commission by Merchant for the fiscal year ended June 30, 2009 be certified by a registered public accounting firm.
c. On the date that Price certified the Merchant balance sheet and income statement for the fiscal year ended June 30, 2009, Price was not a registered public accounting firm.
d. Although Price's conduct with respect to Merchant's financial statements did not involve, and the Board is unaware of conduct by Price involving, the audit of any "issuer" (as defined in the Act and the Board's Rules), approval of Price's registration application would make it lawful for Price to provide audit reports for issuers.
13. As provided in PCAOB Rules 2106(b)(2)(ii) and 5201 (c), and on the basis of the information described in paragraph 12, the Board identifies the following proposed grounds for disapproving Price's registration application -
a. Price certified the balance sheet and income statement of a registered broker-dealer, for filing with the Commission, for a period with respect to which Price knew or should have known that those financial statements were required by law to be certified by a registered public accounting firm.
b. Price's certification of these financial statements while not registered with the Board appears to demonstrate an unwillingness or inability to exercise sufficient care with respect to relevant legal requirements.
Auditing public companies is a privilege, not a right. Just because you are an accountant does not mean you can audit public company financials and Price found this out the hard way. Because this right can be revoked if the PCAOB finds an audit to be inadequate during their review of the auditors work, auditors are sometimes a little paranoid which can cause them to over scope their audits out of fear - it is a never-ending cycle - management over scopes to try to make the auditors happy, auditors over scope to try to make the PCAOB happy. This is why a risk assessment performed and understood by management is VITAL. Management can control the scope of their audits and they should because their auditors will never know their company as well as they do.
Michael Oxley, co-author of the Sarbanes-Oxley Act of 2002, was questioned on whether or not he believed the Supreme Court would find Sarbox unconstitutional. The Supreme Court is currently reviewing the legislation for constitutionality. An auditor from Nevada claims the Public Companies Accounting Oversight Board or PCAOB, put him out of business. He then filed a lawsuit claiming the PCAOB and the legislation is unconstitutional and the case has escalated to the Supreme Court.
"I'd be surprised to see the court find the entire act unconstitutional," said Oxley, a former House member from Findlay, Ohio. But the decision will "almost certainly will come down to a 5-to-4 vote."
Michael Oxley and Richard Thornburgh
Keith Hodan | Tribune-Review
Oxley continued, "We set up the [PCAOB] so the Securities and Exchange Commission would appoint the commissioners, and anything they did would have to be approved by the SEC," Oxley said. He also said he expects a court decision in the next few weeks.
Here is a little irony for you, the PCAOB, who enforce the need to scrutinize financials for reasonableness and accuracy, and, who have the authority to set auditing standards for public companies and can discipline accounting firms whose audits are deemed deficient, can set the fees they charge public companies without any oversight from the President of the United States. To put this into perspective, the US President makes $400,000 a year as a salary for the job. The PCAOB Chairman, Mark Olson, took home $654,406 in 2008 and several other employees took home over $500K. This salary EXCEEDS the $500,000 salary cap set by the Obama administration for executives of banks taking bailout money.
I still stand by my previous statements, since the government had the power to require such things as Sarbanes-Oxley, they should also have the power to regulate how much it should cost companies to comply. If this means the current structure of the PCAOB is unconstitutional because it falls outside of the ability to be overseen by the Government, then it should be changed. The PCAOB enforces the requirement that audit firms be overseen, shouldn't be PCAOB be overseen by someone too?
I will be in Sacramento on Friday, 3/5, taking meetings. I am available at 707-477-0008 in the event someone would like to meet.
Michael Fung, our Senior Technical Developer and I will be in San Diego tomorrow, 3/3, taking meetings. We are reachable at 707-477-0008 in the event someone would like to meet up.