This past April, Japanese pitching sensation Daisuke
Matsuzaka wowed Red Sox Nation with his “gyroball.” From now until
next April, Dave Sackett expects to be equally mesmerized by Japan’s
version of the corporate curveball.
The corporate controller of Ulvac Technologies is charged with
implementing J-SOX — the Japanese edition of the Sarbanes-Oxley Act
(sometimes abbreviated as SOX). The process is a “huge deal” at the
Methuen, Mass.-based subsidiary of Ulvac Inc. of Japan because the private firm (the parent
is public) has never thought
much about documenting internal
controls or formalizing its
audit trail. “Our reporting has
been kind of loose in the past,
but now we need to document
everything,” Sackett says.
Sound familiar? Following
the lead of the U.S. standard setters,
Japan passed a slightly less
onerous version of Sarbox in June
2006 in response to its own corporate-
accounting scandals.
Now, working with auditors from
Oishi & Co. of California, Sackett
is instituting procedures such as
linking employee hours to products
by work order, creating a signature-
authorization document
for expenses, and installing a
J-SOX-compliant ERP system.
While Sackett has never implemented Sarbox regulations
before, “I followed them closely, because I knew we’d be mimicking
the internal controls and checklists,” he says. Natasha Nelson, chief
ethics and compliance officer at Daiichi Sankyo Inc. in Parsippany, N.J.,
however, went one step further. She spent the past two years watching
her fellow pharmaceutical companies implement Sarbox. With the
support of company executives in Japan, she rolled out a strong
whistleblower program, hired staff with Sarbox experience, and even
test audited a process. She learned not to overdocument, she says,
and to attend lots and lots of seminars “to get the credentials we need
to fully understand all the aspects of Sarbox.”
Both companies are further along in preparing for J-SOX than
most, says Paul Sachs, managing director of the Los Angeles office of
Protiviti Inc. Too many U.S. subsidiaries of Japanese companies are
waiting for directives from the head office rather than finding their
own resources to help with J-SOX compliance, he observes. But all of
them must be compliant by March 2009. And like his American counterparts,
Sackett hopes there will be positives that come from the
process. “It’s like medicine,” he says. “It tastes bad going down, but
you know it’s really good for you.”