Sarboxing

Yet while ERP vendors may be saying this is part and parcel of what they do, they're going to have to fend off some powerful rivals—rivals that are already well entrenched in the business-computing landscape. IBM, for one, has teamed with Big Four auditor KPMG to offer IBM Lotus Workplace for Business Controls and Reporting, a program designed to help businesses tackle the issues of documenting and dynamically assessing their controls and business processes.

Some industry watchers, however, say Big Blue competitor Microsoft may pose an even bigger threat to the Section 404 sales of ERP and niche vendors. Next month the company will release the Office Solution Accelerator for Sarbanes-Oxley, a software package built for the Office System platform (and one of a number of business "accelerators" the company markets). Essentially, the accelerator for Section 404 compliance sits on top of a company's existing infrastructure and features a familiar Windows interface. As with many products from Gates & Co., Microsoft is relying on partners to extend and enrich the software.

And which of Microsoft's raft of business partners will likely end up doing the extending and enriching? Says one industry watcher: "I think auditors will end up using this." Just what Section 404 software vendors need: more competition.

John Goff is technology editor at CFO.

Auditors in the Ring

Section 404 of the Sarbanes-Oxley Act of 2002 has been good to the Big Four. Not only are the firms in line to pick up considerable attestation business this year, they're also pitching 404 compliance tools to clients. Says Steve Barth, a partner at Foley & Lardner: "Audit firms are jumping all over this."

Some corporate managers are availing themselves of their auditors' tools—at least for this go-round. John Van Decker, a vice president at research firm Meta Group Inc., is advising corporations to "go through [the] first year with [your auditor's] tool, understand how it works with 404, then replace that when you understand the nature of your 404 process."

Other management teams, however, are choosing to talk to their auditors about the configuration of third-party Section 404 software. Volt Information Sciences CFO James J. Groberg says that his company gave auditor Ernst & Young a demo showing how Volt structured its 404 effort, which is encapsulated in a program from OpenPages. "The last thing we want in July is E&Y saying, 'Oh, that's not what we meant.' "

There are other risks involved with using an external auditor's Section 404 tool. At the top of the list: software development is not the core competency of accountants. Says Bruce Ruberg, controller at Aspect Communications: "The Big Four are not in the business of software, long term." In addition, purchasing Section 404 software from external auditors may send the wrong message to shareholders. "An auditor firm is very involved in [a] 404 process, then it sells you a software tool, then it comes in and audits over this," says Barth. "You can just see the cases coming up, can't you?"

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