US companies will invest billions of dollars this year
in technologies and consulting services to help them comply with
the financial regulations.
However, few organisations have been unable to take advantage of
using those investments to improve their business because they are
so focused on meeting regulatory deadlines, said executives at an
IBM compliance conference in New York.
Most publicly held companies have until mid-November to document
the internal controls they use to manage their finances under
Section 404 of the Sarbanes-Oxley Act.
Because companies are racing to meet this deadline, many are so
"tactically focused" on this requirement that they have not been
able to make more far-reaching changes to their businesses, said
Susanne Ruschka-Taylor, a partner and Americas leader for business
risk management at IBM Consulting Services.
"If you're going to spend [billions of dollars] on these
initiatives, you might as well get something out of it," said
Adrian Bowles, director of education and research at the IT
Compliance Institute.
But that has been tough for corporate officers wrestling with
compliance deadlines for federal and industry regulations and for
companies in the financial services industry to meet the Basel II
deadline.
Basel II is an international regulation which would require
banks to tighten their integration of back-office systems and use
more sophisticated risk management tools.
Regulatory experts said it makes more sense for companies to
develop a compliance framework rather than installing standalone
systems to support each regulation. Such a framework would provide
them with an underlying set of technologies and monitoring tools
that they can apply to all regulatory requirements.
"We're not that sophisticated yet, but it's something we're
trying to work toward," said John Benninger, senior vice-president
of risk management and corporate governance at Huntington
Bancshares.
Huntington Bancshares has set aside roughly $500,000 for Section
404 compliance, said Benninger. The bank is spending some of that
money on the IBM Lotus Workplace for Business Controls and
Reporting, a system from IBM for managing internal controls and
data requirements under Section 404.
Huntington Bancshares began populating the IBM system in October
and plans to put Version 2 of the software, which was announced
here at the event, into production by the end of this month, said
Benninger.
Other IBM customers who spoke at the event also acknowledged
that they are making little progress in creating a compliance
framework.
Thomas Hoffman writes for Computerworld