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Sarbanes-Oxley News & Developments
Safety FirstHow finance executives are keeping their companies safe and secure from accounting scandals.
> > Roger Friedberger has been keeping a lookout. He became CFO of ILOG in 1996 - a software provider headquartered in France and CA - he has been aware of the possibility of a revenue-recognition misstep. The temptation for salespeople to boost their compensation by booking revenues improperly, before they are fully earned, is famously strong in Silicon Valley. The effects of overly aggressive accounting have a way of scaling the corporate ladder, leading to restatements and shareholder lawsuits - not to mention executive dismissals. By putting preventive measures in place Friedberger has helped ILOG steer clear of a restatement, or even an adjustment by its auditors, since the company went public in 1997. That safety first approach has also found favor with many other finance chiefs, corporate risk managers, and internal auditors who guard against fraud, gamesmanship, and inattention, and keep accounting woes from their doors.
Sarbanes-Oxley compliance requirements have spurred these efforts. But how fast the fortunes of a company can plummet in the first blush of bad accounting news might be motivation enough. Indeed, a tarnished reputation can deliver a lingering jolt to the finance of a company, suggests a May 2003 study by Deloitte & Touche of companies touched by corporate accounting scandal.
Source: CFO
Published:2003-12-09
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