Public companies have now been faced with SOX compliance for at least one complete fiscal year. Essentially, the interpretation of compliance has been focused on ensuring that the internal controls and processes, if followed, will curtail any misinformation related to current financial reporting. However, it can be argued that monitoring the internal processes alone does not guarantee financial accuracy. This argument is based on pre-SOX practices not ensuring legacy data accuracy.
Fixed asset data, a large portion of the balance sheet, is an excellent example of this situation. If there were unrecorded disposals prior to SOX compliance, what is the likelyhood that the financial balance sheet is accurate?
This is the legacy data issue. How important is this issue to the CEO and CFO for SOX compliance?
Comments are welcome!