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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.

BEFORE SOX 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. AFTER SOX 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

SOURCE: Protiviti

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