After Enron, documents must be unshreddable
Published: 06 Nov 2002 15:54 GMT
Corporate governance has rightly shot up the agenda since the Enron and WorldCom scandals. CEOs, CFOs, auditors and others, are going to have to move more carefully in future. But so far, very little has been said about the implications for IT -- which is a shame, because those implications could be very interesting.
This summer, the Sarbanes-Oxley Act (HE.3763) came into force in the US, a piece of legislation designed to put corporations under scrutiny. Large companies' audits are subject to a new special-purpose regulator. It has become a crime to destroy or conceal relevant documents -- and like other white-collar crimes, this one could now incur a ten-year jail sentence and a fine.
The Securities and Exchange Commission has put together rules to implement the Act's provisions, and IT managers had better start paying attention, because it will affect the way they have to handle documents.
But, you say, this is US law -- why should we worry? Because of globalisation. The Sarbanes-Oxley Act proposes that European accounting firms involved in any part of the auditing of US companies' accounts should be subject to scrutiny by the new board.
The outspoken Frits Bolkestein, European commissioner for the single market, is fighting to protect European companies from what he sees as an over-reaction. The Act has been "drafted in a rush", he said in the Financial Times. Mr Bolkestein favours guidelines, not rules. He thinks the way things work now hasn't been so bad.
Whatever the outcome of the political discussions, we had better keep our eyes on Sarbanes-Oxley and its implications. The general interconnectedness of business is sure to spread the new, tighter business practices from the US to Europe, whatever the letter of the law says we are required to do. The SEC believes that any company that files reports to it must comply with Sarbanes-Oxley.
To protect your company from inadvertently breaking the law (or from individuals deliberately doing so) IT managers will have to be sure they can help executives produce any documents that are required. This means that documents must be easily findable, and some of them will have to be unshreddable.
This, in turn means that some companies in what used to be called "document management" are enjoying small gains in share prices.
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