Public companies including E.ON and THQ Inc. use financial reporting and compliance management to meet Section 404 deadlines
San Diego — November 12, 2004 — Globally operating energy-service provider E.ON and California-based video game maker THQ Inc. are both using SAP's financial reporting and compliance management applications to help them comply with the latest Sarbanes-Oxley Act mandate, which compels certain public companies to meet Section 404 requirements by November 15, 2004.
SAP software for managing compliance with the Sarbanes-Oxley Act is part of mySAP enterprise resource planning (ERP) and also can be implemented as an add-on to SAP R/3. The software provides an integrated set of tools and technology for organizations to improve their internal control testing projects for ongoing compliance with the U.S. Sarbanes-Oxley Act, as well as an expanding array of regulations and standards such as France's Loi de Securite Financiere LSF, or the Netherland's Tabaksblat.
The software's key components are designed to improve and streamline the auditing process, internal controls management, and "whistle blowing" procedures, according to SAP.
The software's audit information system provides access to key reporting controls, such as segregation of duties to reduce employee error and fraud and reconciliation of discrepancies between sub-ledgers and general ledgers. The results of these reporting controls can be documented in the management of internal controls application, which uses the workflow capabilities of the SAP NetWeaver platform to support a controls review and problem-resolution process.
The provider said its customers are using these key components of mySAP ERP to help them manage internal controls in order to facilitate their compliance with Section 404, a major provision of the Sarbanes-Oxley Act, requiring that management report annually on the effectiveness of internal controls for financial reporting and that external auditors confirm management's assessment.
"In today's business environment, customers have to justify every IT dollar they spend, and they are investing in areas of strategic importance such as corporate compliance," said Jim Hagemann Snabe, chief operating officer, Financial & Public Services, SAP AG. "Regulatory compliance is one of the reasons why our ERP suite is our strongest selling software."
According to Michael Hoefer, head of IT-Audit 2, E.ON Audit Services, responsible manager for the SAP implementation at E.ON, the world's largest investor-owned energy service provider, "With more than 100 organizational units and more than 1,000 users involved in the assessments of internal controls in our Section 404 project, we rely on the stability and scalability of SAP software to meet our reporting deadlines."
Al Hunt, who is the director of Internal Audit at THQ Inc., added that his company found SAP's solution for management of internal controls to have a logical structure for organizing Sarbanes- Oxley documentation. "The most important benefit for us has been that control and process assessments and testing and sign-off activities are scheduled and workflow tasks are automatically sent to each responsible person," he said.
The announcement was made at the Association of Financial Professionals (AFP) Conference, which was held in San Diego, Calif., November 7-9.