Compliance Week TV

 In our first Compliance Week TV video we hear from Frank Diana, executive vice president of enherent Corporation, who discusses the challenges involved in information management.
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Webcasts of the Week

 Defining and Executing Systematic, Risk-Based Third-Party Due Diligence for FCPA Compliance
Sponsored by The Steele Foundation

Help Wanted: Ad of the Week

 Compliance Education & Communications Mgr.
Submitted by Oracle

Event of the Week

 Corporate Governance Programs
Courtesy of Harvard Business School

Thought Leadership of the Week

Access Management: Efficiency, Confidence, Control
Courtesy of SAP

The Resource Exchange

Code of Conduct
Submitted by BP

Sample Risk Acceptance Request
Submitted by Circuit City

Featured Databases

Whistleblower Guidelines
Search Whistleblower Policies, Contract Options

Class-Action Filings
Download Text of Class-Action Complaints

GRC Illustrated Series

 Improving GRC by Visualizing Your Data
The 24th Installment in This Exclusive Series
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SEC Approves SOX 404 Guidance
 No More Delays For Non-Accelerated Filers
 As expected, the Securities and Exchange Commission has voted to adopt final guidance for management on evaluating and assessing internal control over financial reporting as required by Section 404 of Sarbanes-Oxley. The SEC said it will not delay implementation for non-accelerated filers, which means those companies will comply with the management reporting provisions later this year and the auditor attestation requirement a year later, as planned. The SEC also made minor rule changes to clarify terminology and other fine points of Section 404 compliance. The latest details are inside.

SEC Approves SOX 404 Guidance

Auditing Standard No. 5 Approved
 Thursday morning, the Public Company Accounting Oversight Board unanimously adopted Auditing Standard No. 5, establishing a more flexible, principled approach to the audit of internal control over financial reporting. The new audit rule replaces the highly prescriptive Auditing Standard No. 2, which was heavily criticized for driving excessive costs associated with Section 404 of Sarbanes-Oxley. The Board says it has aligned its rule with management guidance just approved by the Securities and Exchange Commission (see above), and promises that guidance is still coming on how to scale the internal control audit to smaller companies. Complete details will be published in the next edition of Compliance Week.

Download PCAOB Auditing Standard No. 5 (118 Pages)


404 Guidance Expected This Week
All Eyes Are On PCAOB’s Auditing Standard


Brounstein
Corporate America will learn its regulatory fate this week when the SEC releases its long-awaited interpretive guidance for management regarding internal control assessments. Many expect the SEC’s guidance for management to be largely unchanged from proposals unveiled in December; more speculation abounds on how the PCAOB might revise its proposed Auditing Standard No. 5. “I think the final AS5 will probably look more different than the final management guidance does from the original,” says Rick Brounstein, a member of the SEC advisory committee on smaller public companies. Details are inside, and Compliance Week will provide online updates as soon as the guidance is available.
404 Guidance Expected This Week

What The New Guidance Will Mean To You


The SEC’s revised rules for SOX compliance are due out this week, and Compliance Week columnist Rick Steinberg—who co-authored the original COSO internal control framework—says companies should welcome the reforms. Inside is a look at how relaxed rules are likely to affect SOX compliance efforts and companies’ dealings with external auditors. “The net result is that the new rules certainly provide opportunities for significant efficiencies on the part of both management and auditors,” Steinberg says.
What The New Guidance Will Mean To You


Building Controls For 409A Compliance


Marett
New rules for Section 409A of the tax code, which govern deferred compensation agreements, are finally here. Now comes the much harder task of complying with those rules. Compliance executives will need to ensure they have the right controls—or create new ones if they don’t—that will go well beyond the usual financial functions. “Companies need to identify who’s in charge of each and every arrangement or function that might have 409A consequences and get them educated on how the rules can impact what they do,” says Louis Marett of the law firm Choate, Hall & Stewart.
Building Controls For 409A Compliance

Simple Strategies For Strong Access Control

RELATED WEBCAST
Don Nicolaisen On The Future Of Access Controls
Here’s the truth about access controls for IT systems: Everybody needs them, but nobody knows exactly what they should look like. Companies can, and should, craft solid controls that allow and restrict user access as employees hold various posts in a company, experts say. Then come the little missteps. “I can’t tell you how many Fortune 500 organizations we talked to where the CFO hadn’t changed his password in three years,” says Justin Morrow of consulting firm Control Solutions. Inside is a look at how several companies manage their access controls and how to approach the problem for a comprehensive solution.
Simple Strategies For Strong Access Control


‘Aiding And Abetting’ Gets More Attention


Himmel
Suddenly, liability for helping others commit fraud is under a harsh spotlight. Already the Supreme Court has agreed to decide the liability of so-called “secondary actors” in fraud schemes, and recent SEC enforcement actions demonstrate yet again that the SEC has its own powerful tools to punish those who facilitate fraud. “The SEC goes after aiding and abetting for many reasons,” says Michael Himmel, a member of the law firm Lowenstein Sandler. A look at the evolving risks and liability for aiding and abetting fraud is inside.
‘Aiding And Abetting’ Gets More Attention

Compliance Week 2007. June 6-8, 2007, at The Mayflower Hotel in Washington, D.C.


‘Say On Pay’ Takes Root At Home & Abroad

THE DATA
Inside: Spreadsheet Of CEO Compensation By Country
“Say-on-pay” policies, giving shareholders advisory votes over executive compensation, are sweeping Corporate America. Just this month, Verizon and Blockbuster both saw majority votes in favor of say-on-pay proposals, and more than a dozen other companies have seen strong shareholder support for it. Inside is a look at the latest say-on-pay developments in the United States and how say on pay has already worked in Great Britain, Australia, and elsewhere. A downloadable spreadsheet of CEO pay levels in the U.S. and six other nations is included.
‘Say On Pay’ Takes Root At Home & Abroad


SOX Costs Fall, Audit Fees Flat; More


Cangemi
SOX compliance costs tumbled 23 percent last year, according to a survey of large companies conducted by Financial Executives International. But audit fees remained essentially flat in 2006, meaning the savings all come from companies’ improved efficiency. “Companies have done a better job of implementing guidance of the SEC and PCAOB … and they’ve streamlined the work that they’re doing,” says FEI President Michael Cangemi. Also this week in the Accounting Industry Update, the Institute of Management Accountants has published new guidance on implementing enterprise risk management.
SOX Costs Fall, Audit Fees Flat; More


Individual Investor As Possible ‘Swing’ Voter


With today’s attention to corporate governance and the populist sentiment that swells up over executive pay and other issues, the “little guy” is quickly emerging as an audience to be courted for investor relations. This week, Compliance Week columnist Lou Thompson, former CEO of the National Investor Relations Institute, talks about the vital role individual investors can play in shareholder battles and how to communicate to this diverse group. “Individuals have for years been taken for granted,” he writes. “Now that they are dealing with issues such as pay for performance, that loyalty can no longer be assumed.” More is inside.
Individual Investor As Possible ‘Swing’ Voter

Upcoming Compliance Week Webcasts

Date, Type Name Description
May 24
Webcast		 Managing Ethics Globally Join LRN for a discussion of how to manage ethics and compliance functions at home and abroad.
June 14
Webcast		 Assessing The Impact Of Rule 26 Join Iron Mountain for a discussion of the new federal e-discovery rules, six months after their enactment.
June 21
Webcast		 Practical Guidance On New AS5 Join Paisley Consulting for a review of how Auditing Standard No. 5 will affect companies’ audits of internal control.
June 28
Webcast		 Future Of Access Control Join D2C Solutions and former SEC Chief Accountant Don Nicolaisen for a review of new regulatory guidance and the role of access controls.


How To Make Choice Between GAAP, IFRS


Pounder
The next great debate in financial reporting may be whether companies should present financial statements in U.S. Generally Accepted Accounting Principles or International Financial Reporting Standards. How to make that choice? By pondering industry pressures, investor expectations, and future changes to both systems, experts say. Companies should also remember that GAAP and IFRS will continue to evolve, says Bruce Pounder, president of Leveraged Logic. “What management should focus on is preparing now to implement country-neutral accounting standards within the next five years.” More is inside.
How To Make Choice Between GAAP, IFRS


More Poison Pills For Japan Proxy Season


Terashita
As annual meeting season gets underway in Japan, defenses against hostile takeovers appear to be the big proxy issue for the second year in a row. Japanese companies have a heightened awareness—some would call it fear—of hedge funds and other outside investors, now that the nation has overhauled its corporation law. “We are very busy, especially giving advice regarding takeover defenses,” says Shirou Terashita, chief operating officer of investor relations firm IR Japan. More on what issues are likely to dominate Japan’s hyperactive annual meeting season is inside.
More Poison Pills For Japan Proxy Season


Who’s Coming And Going In Governance


Browne
Lord John Browne, already pushed from his job as chief executive of BP over allegations that he committed perjury to cover up embarrassing rumors about his personal life, has now resigned as chairman of the audit committee at Goldman Sachs; Browne also served on Goldman’s compensation and governance committees. In other news, Sotheby’s, Entergy, and La-Z-Boy have all named new accounting executives, while Xerox and LandAmerica Financial have tapped new general counsels. More about the latest hirings, firings, and other industry gossip is inside.
Who’s Coming And Going In Governance


Date Lead Article Description
May 15 SEC Ponders
Materiality 		The Securities and Exchange Commission is quietly reviewing its guidance around materiality and when errors should be disclosed.
May 8 Avoiding Restatements Compliance Week columnist Scott Taub, former deputy chief accountant at the SEC, discusses when restatements can be avoided.
May 1 SEC Moves On Proxy Access, IFRS The Securities and Exchange Commission has promised public hearings and concept releases on two contentious issues.
April 24 PCAOB: Auditors Still Don’t Get It The PCAOB says auditors still are too inefficient in auditing internal controls over financial reporting.
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NOTICE
Because of the U.S. Memorial Day holiday, Compliance Week’s next edition will be published one day late, on Wednesday, May 30. We will resume our standard Tuesday morning schedule on June 5. Thank you.
—The Editors

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