Build Keeping Right Hand,By Anna Maria Virzi | Posted 2005-09-07 Print
The maker of Kleenex tissue and other products faced a daunting task: Document 4,000 different financial controls. It could have been worse.Left Hand in Sync">
Kimberly-Clark had a head start over other companies on another front. In 2000, the company's North American security support team developed an in-house application to make sure that one person in a company cannot perform two conflicting taskssuch as signing off on both purchases and account receivables. In the accounting world, this is known as "segregation of duties." Two years later, that team upgraded to an off-the-shelf software tool from Virsa Systems that works with SAP software to flag those conflicts.
Jayne Gibbon, North American security support team leader for Kimberly-Clark, says that when Sarbanes-Oxley took effect, detecting segregation of duties was one fewer requirement that her company had to worry about. The software tool "allowed us to significantly reduce the amount of time it took to document and test the effectiveness of our processes," she says. "We could run a report and show the auditors that we don't have any conflicts."
While the cost of complying with Sarbanes-Oxley is relatively easy to quantify, the benefits are more difficult to measure. In 2004, Kimberly-Clark spent more than $10 million on the effort, including labor, audit fees and other expenses, or at least $670,000 for every $1 billion in revenuea proportionally lower spend than many other companies. Corporations with average revenue of $5 billion spent $4.36 million for Section 404 compliance, or about $870,000 for every $1 billion in revenue, according to a March survey by Financial Executives International.
A big benefit: There is more discipline in how companies control their organizations, Rittenberg says. "There is more uniformity in controls, more awareness of the need to control companies, starting at the top and extending to the board," he explains.
At Kimberly-Clark, the internal control review brought increased awareness that a policy or procedure might be executed in slightly different ways from one location to another. "Let's say there are 10 steps to paying an invoicehow we provide access to the systems, how we reconcile our accounts," Rehfuss says. "It's pretty basic stuff, but we have found it gets executed differently" at assorted locations.
Before some controls are standardized, Kimberly-Clark may need to update its information systems. Take the company's use of SAP resource planning software. Because the software was rolled out in phases over years around the globe, the company has four or five different versions in use, Rehfuss says. As a result, Kimberly-Clark's top executives have discussed the possibility of standardizing SAP so that controls can be executed more consistently throughout the company. And, a result, the company could better ensure that records are consistent and accurate and thus easier to collect and analyze.
The supporters of Sarbanes-Oxley contend that the law will bring long-term benefits for investors and com_panies alike.
"This reporting helps restore investor confidence. We think it helps manage the business, not just improve accounting," says Gregory Jonas, a managing director of Moody's Investors Service, a firm that rates the creditworthiness of companies.
"Benefits we're seeing are more qualitative than quantitative," says George I. Victor, a certified public accountant and director of quality control at Holtz Rubenstein Reminick, an accounting firm in New York. "There's more oversight, stricter controls. Those are benefits you might not be able to put a dollar value on."
And that's nothing to sneeze atfor Kimberly-Clark or anyone else.
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