Analysts at Butler Group have warned that making their IT systems compliant with the government’s proposed Companies Bill could costs businesses millions. Like the Sarbanes-Oxley Act in the US, the Companies (Audit, Investigations and Community Enterprise) Bill is intended to overhaul company law in the wake of high profile corporate accounting failures such Worldcom, Enron and Parmalat. The bill will lay down strict rules on accounting and auditing practices, and will attempt to make business processes more transparent to shareholders with the introduction of regular OFRs – operational and financial reviews.
When the bill becomes law this will have wide ranging effects on the way organisations conduct their business. The requirement to keep more detailed records of business processes and decision making means that IT systems will play a critical role in ensuring compliance.
Mike Davis, senior research analyst at Butler Group said “While the UK has always had better auditing standards than the US, the Companies Bill tightens these up still further. However, as with Sarbanes-Oxley, the only efficient and cost effective way for UK businesses to meet the Companies Bill requirements will be through investment in certain key technologies. Failure to make these investments quickly and correctly will leave UK businesses prone to severe financial penalties.”
The company has identified several technologies that it claims are key to compliance with the bill. Business process management (BPM) systems will be required to ensure that tasks are assigned to appropriate staff in an auditable and transparent way while records and email management along with disaster recovery systems will be needed to ensure that key business information is securely stored and available for retrieval on request.
Davis said “For the company itself the requirement to provide OFRs on such matters as HR will force it to invest in the technologies that will enable it to do so. Implemented correctly, management will be able to use these technologies to easily access up to date information on their own company and its performance that they have simply never had before. The power this will give management to make better and more strategic decisions will bring real and immediate value.”
The Department of Trade and Industry is still working out the finer details of the bill before it is put before parliament, details of its progress can be found at DTI’s web site:
A spokesman for the DTI said “We can’t give an exact date as to when the bill will become law as it still in consultation but once it is ready and parliamentary time permits then it will go through. However, related bills such as CAISE (Companies Audit Investigations & Community Enterprise) which affect auditing processes are already being put before parliament ”