Title Slide . ProWorks for Sarbanes-Oxley (SOX) Compliance.

www.ProWorksInfo.com

ProWorks

for Sarbanes-Oxley (SOX)

Compliance

Introduced as a result of corporate failures such as Enron, Tyco, WorldCom….. to restore investor confidence in companies

Sarbanes Oxley Act of 2002

SOX Key Requirements

Corporate Management Must Certify:

• Internal Controls:– Exist – Are Periodically Tested

• Deficiencies are Disclosed

• Control Changes Reported; and

• Financial Statements are Accurate

SOX Key Requirement

• Annual report (10K) must contain a report from management on internal controls

Definition of Internal Control

Process effected by a company’s board of directors, management and other personnel that drives business success in three categories:

– Reliability of financial reporting

– Effectiveness and efficiency of operations

– Compliance with laws and regulations

Efficiency & Efficiency & Effectiveness Effectiveness

of of OperationsOperations

Reliability of Reliability of Financial Financial ReportingReporting

Compliance with Compliance with Laws / RegulationsLaws / Regulations

Control Self Assessment

• Your Role:

– Design:• Effectiveness of controls

– Operation:• How the control was applied

What Does Your Company Need?

• A documented internal control structure that includes all relevant policies, procedures and operating principles

• A structure that is:

– robust

– designed to be kept current and cost effective

What Does Your Company Need?

• An infrastructure that:

– Facilitates management’s confidence

– Supports monitoring the completion of applicable control procedures on a real-time basis

– Can be tested

Layers of Testing• Self Assessment Done locally

• Management Assertion As instructed by Headquarters/Parent Company

• External Auditor Attestation

• ProWorks can help with all 3 layers of testing!

How ProWorks can help

– What is it / What can it do• Initially developed for Manufacturing Process

Control & Maintenance• Can be leveraged for Accounting Process

Control to meet SOX testing requirements

SOX & ProWorks

1. Work Instruction

2. Evidence of Control

3. Evidence of Management Review

SOX

Company’s Policies/Procedures and Processes

ProWorks

*Created: One time for all sites

Site A * Site B * Site C *

An Example of a Company’s Key Processes

Accounts Receivable/Revenue

Consolidation/Financial Reporting

Inventory/Purchasing Debt/Treasury

Fixed Assets Insurance

Cash ManagementLong- Lived Assets – Goodwill Intangibles, etc.

Information Technology HR – Payroll/Benefits

Taxes – Deferred/Provision

Acquisitions and Dispositions

Step 1: Define Controls

Step 2: Develop control testing

Step 3: Develop procedures

Step 4 : Setting it up in ProWorks

• Begin by Developing Universal Templates

• Create Universal Steps to Document & Test Compliance

Step 4 : Setting it up in ProWorks

Step 4 : Setting it up in ProWorks

• Develop (or Revise) Tests Unique to the Business Unit

Step 4 : Setting it up in ProWorks

• Assign Tasks to specific staff members

Step 4 : Setting it up in ProWorks

• Approve and Release Templates

Step 5: Perform test in ProWorks

Step 6: Management review