The Benefits of Controls Automation in Creating a Sustainable Compliance Environment
By Stan Lepeak
Overview
Regulatory compliance mandates are becoming increasingly pervasive and
onerous in western countries (see Figure 1). Addressing and responding to these mandates, particularly Sarbanes-Oxley (SOX) and regulations like HIPAA in the United States, Basel II globally, and various codes of conduct laws and privacy legislation across Europe, has become a major driving force defining and directing business activities and investments.
A Fortune 100 company could easily find that its total direct and indirect costs for SOX compliance could exceed $10 million annually. AMR Research estimates that affected organizations worldwide will spend more than $6 billion on SOX related activities in 2005, not counting actual audit fees, and will spend more than $80 billion during the next five years on compliance as a whole (e.g., SOX, HIPAA, and the PATRIOT Act). In addition, some organizations are experiencing a doubling in the fees that they pay their external auditors. This does not take into account the opportunity cost of compliance, and the distraction it creates from other critical activities.
Regardless of the collective merit of these regulations, most are here to stay and the overall regulatory environment is not going to loosen significantly in the near term. Additionally, while the debate will continue to rage for the foreseeable future as to whether these regulations are overly burdensome, a necessary evil, good for business, or somewhere in between, affected organizations must address them as efficiently and effectively as possible.
Despite the permanency of these regulations, many organizations still view efforts to address them as events. For example, SOX is not another "Y2K" effort, despite the sprint towards first year audits. It is a Y2K effort – without a January 1,2000.
Given the enduring nature of these regulations, they are creating fundamental and permanent changes in how organizations operate. There is nothing wrong with breathing a sigh of relief after achieving a passing grade on the first year’ SOX audit. But organizations must continue to work on and execute a strategy to make compliance more sustainable. They must also work to leverage the investments made to address and achieve compliance into greater competitive gain wherever and whenever possible
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Contact:
Marlo Capponi
Unitech Systems, Inc.
1240 East Diehl Road, Suite 300, Naperville, IL,60563
Telephone: 630.505.1800
mcapponi@unitechsys.com
www.unitechsys.com
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