Corporate corruption is in today's limelight and CEOs will increasingly be placed in the 'Hot Seat' to testify and prove their organization's trustworthiness and responsibility to protect investor's interests. To regulate corporate accountability and disclosure issues, the U.S. Congress passed the Sarbanes-Oxley Act of 2002. Integrity, accuracy, and reliability of corporate disclosures and correlating records are now being scrutinized. Organizations need to create strategic information management solutions to ensure that records are not only trustworthy, but also accessible, accurate, complete, and protected.

The new Big Brother (The Public Company Oversight Board) has been established to oversee public companies' audit activities and conduct inspections of registered public accounting firms. A public accounting firm now has to file an application for registration. A list of the issuer names for which the firm prepared or issued audit reports, is a required application part. Audit work papers and related information now have to be retained for 7 years by public accounting firms. To evaluate quality control measures for accurate records maintenance, internal control structure processes must undergo extensive testing. Investigations will involve audit work papers and any other books or records. Penalties for noncooperation with investigations may result in suspension or revocation of the public accounting firm's registration.

Corporate responsibility for financial reporting and the responsibility to establish and maintain internal controls, will now need to be signed off on by the principal executive or financial officer. Fraudulent business practices will no longer be tolerated and rules to prohibit improper influence on the conduct of audits will be implemented. Insider trading during pension fund blackout periods will affect a Plan Administrator's duties and responsibilities of the Plan Administrator under the Employee Retirement Income Security Act (ERISA) of 1974. Disclosure of transactions involving management and principal stockholders are now to be filed electronically and are to be made available on corporate websites. Security analyst and investment decision research reports activities have been updated and will be regulated by the Securities Exchange Act (SEC).

Corporate and Criminal Fraud Accountability Measures will curtail the improper use and application of records retention policies. Penalties for improper destruction, alteration, or falsification of records can include fines and/or imprisonment for not more than 20 years. Corporate audit records should now be retained for 5 years. An accountant who knowingly and willfully violates this rule can be fined and/or imprisoned for not more than 10 years. To deter and punish organizational criminal misconduct, federal sentencing guidelines have been updated.

Employees who provide fraud evidence will be protected by enhanced whistleblower measures. "White-collar" crime penalties have been enhanced for attempts and conspiracies to commit criminal fraud offenses and violations of the ERISA Act of 1974. The chief executive or financial officer will now be required to sign off on corporate financial reports and tax returns. Penalties for signing off on reports that do not comply with regulations can be $1,000,000 to $5,000,000 and/or not more than 10 or 20 years of imprisonment. Finally, whoever corruptly alters, destroys, mutilates, or conceals a record, document, or other object, to impair the object's integrity or availability for official proceeding use, shall be fined and/or imprisoned for not more than 20 years.

Auditing, compliance, quality control, and ethics activities will force organizations to re-evaluate their informational management systems policies and procedures. Internal control procedures must be continuously evaluated and monitored to demonstrate compliance. Strategic information management solutions should include plans to streamline information management activities and adherence to policy and procedures. Senior management commitment to business process integrity and consistency is key to an organization's challenge to surmount these alarming corporate scandal issues.

This article was written by Ellie M. Myers, CRM, CBCP. For more information, contact Entium Technology Partners at (888) 757-2045.

Entium Technology Partners develops and implements life-cycle information programs that ensure compliant business rules and standards for all company records regardless of media type. These information programs control the creation, processing, maintenance, distribution, storing, and disposing of all corporate documents and records by combining information policies, processes, and procedures with the appropriate technology tools. Our solutions will allow enterprise-wide access to corporate documents and records while meeting internal security and business continuity needs.