September 10, 2004—Compliance with the Sarbanes-Oxley Act and other new corporate reporting requirements are a “major challenge” for most US-based multinational companies, according to a new report from PricewaterhouseCoopers. More than half are considering purchasing new technologies over the next 12 months to improve their current reporting infrastructure.
According to the PricewaterhouseCoopers Management Barometer survey, Sarbanes-Oxley presents the greatest challenge to companies’ corporate reporting and compliance because of its far-reaching scope. It was cited by 84% of senior executives, including 49% who described it as a “major challenge.” Other challenges cited by executives were Other SEC Requirements (70%); Internal Reporting & Compliance Needs (68%); Other Non-SEC Requirements (60%); and Customer/ Supplier Requirements (56%).
Overall, only 39% of interviewed executives rated one or more of their company’s business information processes as highly effective. Furthermore, 29% described at least one of their processes as less than acceptable.
Nearly half (46%) of surveyed executives reported that expanded corporate reporting resulted in larger IT budgets, including 11% that increased their IT budget considerably, and 35% moderately. Over the next 12 months, 51% are considering adopting new technologies to improve their company’s current reporting infrastructure. An additional 11% are still evaluating options.
More service businesses (60%) are considering new technologies than product sector companies (48%), although a high level of change is likely among both industry segments.
Tools presently used that were cited as most effectively impacting or enhancing access to data and the control and reliability of that data were ERP, cited by 40% of executives questioned (ERP is currently used by 69% of the companies), and Data Warehouses at 39% (used by 77%). Business Intelligence Software followed far behind in effectiveness (6%; used by 43%); as did XML and Web Service (4%; used by 44%); and XBRL and Web Service (0%; used by 6%).
Companies finding ERP most effective tend to be smaller, with $5.9 billion in revenues, versus $8.7 billion for the average—while those finding data warehouses most effective are above average in revenue size, with $10.6 billion.
Two-thirds of executives reported that their company’s business information processes typically require significant amounts of human intervention, re-keying of data, or a lack of imbedded compliance controls—each of which slows data flow. Service companies report more human intervention required (79%) than product sector companies (63%), while technology companies report more problem areas (81%) than non-techs (61%).
According to the survey, policies and procedures for reporting information are primarily focused on channeling information to the right places, validating that the information is correct, and deriving high-value analytics. Only 15% report that these reporting policies and procedures are fully automated. Seventy-one percent say they are half manual and half automated, and 7% report they are completely manual.
