Sox and backdating
In the area of Supply Chain Management, we are making deals and agreements each day that may contain vital information for the CFO or chief compliance officer.
If any of our agreements have provisions that call for a financial obligation or penalty, we should be advising the CFO or CCO of these obligations.
The SCM organization is in the midst of evolving into something much more strategic and mission critical than one could have imagined just two years ago.
SOX has given us the opportunity to champion our organizations with senior management and demonstrate true leadership within an extremely challenging regulatory environment.
Thus, we expect that opportunistic backdating, to the extent it exists, is more likely to occur in exercise-and-hold transactions.
We find that exercise-and-hold transactions tend to occur at monthly stock price lows.
While SOX gained attention in 20 for its focus on financial and accounting issues, the focus in 2005 has shifted to other functional areas such as Supply Chain, Human Resources and Information Technology.(Section 409) As organizations trend toward more outsourcing, supply chain managers must be aware of the potential impact this will have on compliance.The outsourcing of goods and services is a fundamental make-or-buy procurement decision, and SCM organizations are held responsible for ensuring those decisions are sound, vendor relationships are stable and all contracts are executed as agreed. As a supply chain manager charged with compliance responsibilities, it is crucial that you identify risk areas, such as weak controls that could lead to fraud.Naturally, the chief financial or compliance officer will want to know what these obligations are and will determine the need to include them as time-phased listing of obligations in the company's quarterly report.Areas where such agreements could impact off balance sheet obligations and provisions of SOX are: Are You Reporting Material Changes?
Supply chain managers need to bring these concepts to the attention of their SOX owners so a resolution can be achieved that will enhance the supply chain for the betterment of the company.