Following its much anticipated IPO, the mattress maker had barely a year to document its policies and procedures for a SOX audit.
Tempur-Pedic: The Sox Treatment
The Sarbanes-Oxley Act of 2002 put a demand on publicly held companies to bolster business processes related to financial reporting. The example below describes how a mattress maker like Tempur-Pedic reworked its purchase process to meet the strict new standards.
1 Technology staffer orders desktop computers via phone or Internet. Uses a vendor he's worked with in the past.
2 PCs received by staffer who placed order.
3 He files paper invoice in filing cabinet.*
4 Tech staff tests new machines.
5 If the machines work as expected, staffer who ordered them signs invoice.
6 Approved invoice sent to accounts-payable department.
7 If process takes more than 30 days, a quick-pay discount may be lost.**
8 Accounts-payable clerk approves purchase.
9 Clerk cuts check, mails to vendor.
1 When new PCs are needed, the head of the technology department notifies a purchasing manager, via e-mail.
2 Purchasing manager contacts three or four vendors.
3 Purchasing manager selects the best vendor, based on price and value.
4 Manager generates an electronic purchase order, sends copies to accounts-payable and technology departments, and keeps one copy for his records.
5 Tech department head receives computers and matches what arrives against the purchase order.
6 If everything matches up, the receiving documents are sent on to accounts-payable department.
7 The vendor sends invoice to accounts-payable.
8 Accounts-payable clerk compares invoice with original purchase order and the receiving documents.
9 If all materials are present, correct and approved, clerk confirms this in an electronic record of the pending transaction.
10 An accounts-payable manager reviews confirmation and supporting documents.
11 That manager approves payment and signs off, in the electronic system.
12 A different clerk cuts the check and mails it to the vendor.
* None of the receiving information—date of delivery, person who received the machines—is entered into a computer system
** Typically, a vendor discounts the cost of the goods by 2% if the invoice is paid within 10 to 15 days of the invoice date