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