Oversight Systems’ 5th Annual SOX Survey Finds Financial Executives Seeing Diminished Incremental Benefits from SOX Compliance
Executives see transaction monitoring as value-add, better way to fight fraud
ATLANTA (July 29, 2008) – Oversight Systems, Inc., the leading provider of automated transaction monitoring software, today released the results of the 2008 Oversight Systems Financial Executive Report on Sarbanes-Oxley. The survey of financial executives indicates that they are no longer seeing incremental benefits from SOX, and they are looking to reduce both compliance costs as well as the number of key controls. At the same time, they want a better way to fight fraud.
Results of the survey show that confidence in SOX reducing financial fraud has fallen from 40 percent in 2005 to a new low of 29 percent. New data collected in this year’s survey further indicates that Audit Standard 5 (AS 5), issued last year by the Public Company Accounting Oversight Board (PCAOB), has created new challenges of its own in terms of risk management. Fifty-six percent of survey respondents cited identifying areas of greatest risk as a major challenge in complying with the new guidance.
“I think this is consistent with a broader management and board challenge of tracking all kinds of risks facing the enterprise,” Mark S. Beasley, Deloitte Professor of Enterprise Risk Management and ERM Initiative Director and Professor of Accounting in the College of Management at North Carolina State University, and an advisor to Oversight Systems. “Many organizations are beginning to realize that techniques used to manage risks can no longer be ‘ad hoc’ or ‘unstructured’ in today’s environment.”
When asked about the value of continuous transaction monitoring (CTM) in this environment, 75 percent of survey respondents cited its ability to strengthen the control environment.
“Financial executives realize that there is a point of diminishing returns with preventive internal controls,” said Dana Hermanson, Dinos Eminent Scholar Chair of Private Enterprise at Kennesaw State University, and an advisor to Oversight Systems. “Controls are costly and imperfect such that you cannot prevent all bad behavior. Continuous transaction monitoring offers an appealing supplement to traditional internal controls by providing a mechanism to instantly detect suspicious transactions.”
Nearly half of executives (46 percent) listed CTM’s ability to reduce the cost of maintaining compliance as a top benefit to their respective companies, tying in with their number
one SOX goal for 2008 – to reduce compliance costs. In addition, over a third of executives (36 percent) said CTM had specific value for their companies in terms of detecting and preventing fraud and misuse, and 21 percent cited its role in effective enforcement of policy compliance.
“Knowing that key risks are actually being monitored can be a huge deterrent to fraud, helping to prevent instances, which in turn reduces the need for detection,” Beasley said. “The mere presence of effective monitoring techniques sends a strong cultural signal to the entire organization that fraud is not tolerated.”
About the 2008 Oversight Systems Financial Executive Report On Sarbanes-Oxley
Financial leaders from across the U.S. participated in this study through a combination of an invitation-only online survey and survey intercepts. Titles of those surveyed included chief financial officer, chief audit executive, controller, vice president, director and internal auditor. This marks the fifth time Oversight Systems has conducted executive research into the impact of SOX. The previous annual SOX reports can be found at www.oversightsystems.com/resources_reports.php.
This study follows the release of the 2007 Oversight Systems Financial Executive Report on Corporate Fraud, a survey of financial executives, which found that five years after the Sarbanes-Oxley (SOX) Act took effect, three-quarters of respondents felt that institutional fraud had become more prevalent than it was in 2002.
Other research studies completed by the company include The 2006 Oversight Systems Executive Report on Shared Service Centers and The 2006 Financial Executive Report on Risk Management. All Oversight Systems research studies can be downloaded for free by visiting www.oversightsystems.com/resources_reports.php.
About Oversight Systems, Inc.
Oversight takes continuous monitoring to the next level by combining an audit data warehouse, advanced analytics and workflow into a single, integrated, application. By inspecting each step of individual transactions across systems, Oversight identifies errors, control violations and fraud to drive higher levels of performance and compliance. Oversight's platform automates the entire life cycle finding problems in business processes, fixing those problems and proving the problems were resolved. Oversight is the solution of choice for those CFO's, CIO's and CISO's serious about compliance and enhancing their financial performance. For more information, visit www.oversightsystems.com.
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