Author: Steve Pohlit

Managing Partner Time To Be Great, LLC Global Independent Distributor Healy, Vollara, Xelliss, BEMER Business and Real Estate Coach, Consultant Professional Speaker, Author

Section 404 of Sarbanes-Oxley Should Not Be Exempt For Smaller Companies

Section 404 of Sarbanes-Oxley Should Not Be Exempt For Smaller Companies

Section 404 should be expanded to include privately held companies with bank debt.

Section 4040 should be modified for smaller companies to delete the requirement for external auditors to attest to management’s report.

Background: What Is Section 404?
 From the SEC’s Final Report: “SUMMARY: As directed by Section 404 of the Sarbanes-Oxley Act of 2002, we are adopting rules requiring companies subject to the reporting requirements of the Securities Exchange Act of 1934, other than registered investment companies, to include in their annual reports a report of management on the company’s internal control over financial reporting. The internal control report must include: a statement of management’s responsibility for establishing and maintaining adequate internal control over financial reporting for the company; management’s assessment of the effectiveness of the company’s internal control over financial reporting as of the end of the company’s most recent fiscal year; a statement identifying the framework used by management to evaluate the effectiveness of the company’s internal control over financial reporting; and a statement that the registered public accounting firm that audited the company’s financial statements included in the annual report has issued an attestation report on management’s assessment of the company’s internal control over financial reporting….”

When I was studying internal controls first for the Certified Internal Auditors exam and then for the CPA exam (both certificates earned) I learned the fundamental principles of internal control. One of the key tenants of an effective system of internal controls is management’s (owner’s) attitude toward how business is to be conducted. I also learned that if two or more people colluded, most systems of internal control could be successfully violated.

Bob Greifield, president of Nasdaq, in an editorial published in the Wall Street Journal on Monday March 6, 2006, discussing the anguish continuing over the burden of complying with SOX. He states:” when it comes to SOX, …the burden of compliance is onerous, the cost is significant and it falls disproportionately on smaller companies that are least able to pay.”

Mr. Greifield does not advocate abandoning SOX but agrees their should be and exemption for smaller companies. I completely disagree with any movement to allow and exemption. The core reason for an escalating cost of SOX compliance is the interpretation of outside experts including accounting firms and lawyers as to what is required to support their attestation opinion. Now before the public accountants and lawyers conclude that I am saying the cost of SOX is their fault, I am not at all. The accountants and lawyers are responding appropriately in a best effort to avoid litigation. Remove their responsibilities for Section 404 and place sole responsibility for the report with management where it belongs.

SOX legislation is fundamental internal controls practice. It is unfortunate that our government had to implement this legislation. From a practical point of view it has no choice considering the corporate scandals and huge financial losses from those scandals. However I have maintained for years that SOX should be a contributor to increased profits and not increased costs. Few agree but that is OK. Now I go further and advocate the expansion of SOX to privately held companies with material third party debt. I advocate SOX be amended to remove the outside auditor’s and outside lawyer’s responsibility for attestation for companies below a certain size if they are public.

Steve Pohlit is a CPA has his MBA and has been the CFO of several major domestic and international companies. Today Steve is an expert business consultant focused on helping companies improve their business performance including growing profits, revenues and customers. For a FREE 6 week mini course where you will receive 10 easy to implement action steps guaranteed to increase business revenue in profits by at least 30% in the next 90 days, please visit www.StevePohlit.com All articles published by Steve unless specifically restricted may be freely published with this resource box in tact.

Develop A Customer Data Base, Communicate With Them And Beat 85% of Your Competition!

Maybe you don’t want to work that hard, or maybe you have been burned by consultants or maybe you already have a measure of success. No matter what position you are in, if you Do This One Thing you will beat 85% of your competition. If you are in the 15% category already, please email me with a sentence or two confirming how well this works for you. 

What we are about to discuss applies to every business large or small and in every industry. Next, this is easy to do, but it does require some work. Finally, when you do this consistently, you will make more money than you ever imagined. This action is at the core of what makes people happy.

OK, here it is: every business has customers. if you are a professional service business, your customers may be called clients or patients. At the transaction level they are customers. They buy something from you. Some people cross the path of your business and don’t buy. Others you call on and some buy and some don’t. With each action there is a contact and when you have contact you have an opportunity to make a record of that customer or prospect’ s contact information. That record can be as simple as a first name and email address. It may be comprehensive including complete contact information, biographical sketch, business history and so on.

The one thing you must do if you are in business is obtain the contact information of people doing business with you and people who visit with you but have not yet purchased. You must then use this information and let them know you are thankful and you are sincerely interested in continuing the business relationship. Yes, this applies to every business.

One of the questions I consistently receive is the concern of contacting customers using email. Think of it this way, for most people they are going to business to buy something they want. They will welcome properly positioned messages from you. When you communicate with them regularly with messages containing valuable information and offers, they will continue to support your business and tell all their friends about you.

In assisting clients with implementing a customer development plan I have confirmed the importance of a couple very important points: First you must have a clear privacy policy, next you must use a registration process that confirms their interest in receiving information from you (opt-in) and finally they must be able to easily unsubscribe from your mailing list at anytime. I do not recommend telemarketing to your customers. However, an email alerting them to be listening for an important voice mail broadcast can work and should be tested. Email should not be relied upon exclusively. It should be part of a comprehensive marketing strategy.

I offer all potential clients a complimentary call for up to one hour and most prospective clients walk away with five or more ideas they can use right now to grow their business profits. I highly recommend you take advantage of this offer before time constraints make it impossible to continue.

Be well and prosper,

Steve Pohlit

www.stevepohlit.com  

 

P.S. For more information visit www.localretailmarketing.com

Steve Pohlit is a CPA has his MBA and has been the CFO of several major domestic and international companies. Today Steve is an expert business consultant focused on helping companies improve their business performance including growing profits, revenues and customers. For a FREE 6 week mini course where you will receive 10 easy to implement action steps guaranteed to increase business revenue in profits by at least 30% in the next 90 days, please visit www.StevePohlit.com  All articles published by Steve unless specifically restricted may be freely published with this resource box in tact.