Shari would like to thank Frank Lin for his contribution to this month's column.

Over the last several years, companies have experienced or been impacted by the dot-com failures, accounting scandals and the economic downturn. These events have created an atmosphere significantly more challenging than the "Go-Go '90s." While some companies survived and even flourished, the increased scrutiny and additional legislation have caused new concerns for most companies and their executives.

One of the most important legislative changes in recent years is the Sarbanes-Oxley Act. This column discusses the reporting and analysis challenges –­ but not the legal compliance rules ­– that are associated with Sarbanes-Oxley such as automating, distributing and detailing financial data. It also provides some suggestions for addressing these challenges.

Overview of Reporting & Analysis

The Sarbanes-Oxley Act (initially signed in 2002) is still being interpreted, and the SEC is still defining its ramifications. However, the overall goal was to increase the accuracy and broaden the scope of a company's publicly available information. The following summarizes the impact to a company's financial data reporting and analysis processes (non-reporting implications are not included):


  • Requires executive sign-off on certain financial information/reports.
  • Requires annual internal control report that evaluates processes for collecting, securing, retaining and reporting financial information.


  • Requires disclosure of additional events/activities.
  • May require more rapid disclosure of financial information for standard reports (e.g., quarterly and annual) and for specific events/activities.

The actual impact of the act extends beyond traditional financial reporting to include any action or event that has a material financial impact on the company. For example, non-finance-specific concerns, such as pollution regulation changes that can increase pollution control expenses or insurance costs or engineering patents that can present new revenue opportunities, may require faster and more accurate submission of SEC- mandated forms.
While focused on public companies, private companies should consider these implications as well. Private companies are not usually subject to the same certification or disclosure requirements as public companies. However, the implications of the act may prevent or hinder a private company from being acquired by a public company or from "going-public." Private companies that address these implications will be better positioned to take advantage of such opportunities.


The previously described certification and disclosure implications may present significant organizational, processing and technical challenges for a company's reporting and analysis capabilities. Figure 1 summarizes specific reporting and analysis challenges related to the Sarbanes-Oxley Act.

Figure 1: Reporting and Analysis Challenges Related to the Sarbanes-Oxley Act

These challenges and solutions are probably familiar to most business intelligence practitioners. Therefore, the Sarbanes-Oxley Act should increase the priority of existing business intelligence needs and possibly identify additional initiatives.

To date, this column has discussed specific metrics related to customer, human resource and supply chain insight. Integrating these non-financial metrics and then linking them to financial metrics results in true 360-degree insight and the ability to identify potential financial risks and opportunities. The next column will focus on how an integrated dashboard can provide the savvy executive with a 360-degree view.

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