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Sarbanes-Oxley One Year Later: Sign-Offs on Financials
"Trickle Down" to Other Finance Staff
AFP survey reveals widespread practice of "subcertification"
JULY 29, 2003 -- BETHESDA, MD --One year after the Sarbanes-Oxley
Act required CFOs and CEOs to certify their company's financial statements,
a new survey by the Association
for Financial Professionals (AFP) reveals that companies are asking
other corporate financial professionals to vouch for reported information
as well.
This additional compliance step, deemed subcertification, raises the
spotlight on financial professionals and their critical role in supplying
accurate financial reporting. It requires the employees responsible for
a company's financial information to certify the data they provide that
is later included in public financial reports. It is not required by law,
but viewed as an extra measure of protection.
The job titles held by financial professionals surveyed range from treasurers
and assistant treasures to cash managers, controllers, directors and managers.
Key findings of the survey:
- Roughly one-third of financial professionals who provide information
used in their company's reports to the Securities and Exchange Commission
(SEC) are asked to "subcertify" the documents by signing an affidavit.
- While nearly 80% of financial professionals asked to sign an affidavit
expressed a "high" or "moderate" level of concern about their liability,
21% have sought counsel from the company attorney and 2% from a personal
attorney.
"I believe the prevalence of subcertification, while a direct result
of Sarbanes-Oxley, reflects the increased level of importance that financial
professionals hold within their companies," said Jim Kaitz, AFP's president
and CEO. "Greater accuracy in financial reporting and increased accountability
will ensure that most companies are honest and report earnings accurately.
This knowledge will ultimately lead to a more stable economic environment."
Financial professionals are asked to subcertify a number of items; including:
Specific disclosures in Management's Discussion and Analysis or
footnotes, specific account balances, compliance with company policies
and procedures, adequacy of internal controls in their department/area,
and compliance with company code of conduct.
In June 2003, AFP sent 3,000 of its members a 13-question survey on their
financial reporting responsibilities and the prevalence of subcertification.
There were 425 corporate practitioner member responses. AFP sent an additional
3,000 surveys to other financial professionals garnering an additional
130 responses. At a 95% confidence level, the survey responses are accurate
within a four-percentage point interval.
To navigate the requirements of Sarbanes-Oxley, AFP published a white
paper on subcertification issues that addresses specific concerns
employees might have.
The Association for Financial Professionals in Bethesda, Maryland, supports
more than 14,000 individual members from a wide range of industries throughout
all stages of their careers in various aspects of treasury and financial
management. AFP is the preferred resource for financial professionals
for continuing education, financial tools and publications, career development,
certifications, research, representation to legislators and regulators,
and the development of industry standards.
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