Sarbanes–Oxley: How It Affects You and What You Should Do About It Now

  • by Michael Nadeau, Vice President, Publisher
  • September 1, 2003
The Sarbanes–Oxley Act of 2002 affects the logistics and supply chain teams as well as your company's financial people. What will be your role in bringing your organization into compliance? What areas do you need to be concerned with? This article frames the tasks that you and your team are likely to perform as a result of the Act, and provides advice for getting started.

If you work in the United States, then you likely know about the Sarbanes–Oxley Act of 2002 (SOA). Congress passed this law to prevent the kind of accounting scandals and reporting problems brought on by the likes of Enron and WorldCom, and to rebuild public trust in companies. SOA applies to any company listed on a U.S. stock exchange, even if its headquarters are outside the country or it is a subsidiary of a non-U.S. company.

What you might not yet know is the effect the act will have on how you implement, configure, and manage your company's SAP-based supply chain. Your counterparts in finance have the primary responsibility for ensuring compliance, but portions of SOA clearly have great significance to the operations side. For example, certain types of events must be reported within a specific timeframe, and you must be able to document and verify operational processes that influence your company's financial standing. “SOA isn't just a finance problem,” says Lindsey Sodano, a research analyst who follows the Act for AMR Research. “It is far-reaching into the bowels of the company.”

Even if you believe that your supply chain system already performs the required tasks, it might not do so in a way that satisfies SOA. The act requires the ability to drill down to a transactional level, for instance, and it restricts who can manually handle the data. No matter how confident you are in your system's SOA readiness, the act demands that all companies must review and likely adjust how they carry out certain processes within their SAP supply chain systems. Complicating your task is the fact that Congress has yet to define all the requirements of SOA &mdash; most significantly, what constitutes an adequate control.< /p>

Michael Nadeau

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