February 28, 2008 | Author: PM Hut | Filed under: Project Workforce Management
Now more than ever, project managers and the project management office (PMO) have to gain a better understanding of the roles they play in compliance. Sarbanes-Oxley (SOX) has made corporate governance mandatory for public companies, and project managers generate the raw data that make compliance possible. Forecasts of costs and revenue, measures of financial risk, real-time data of project status are a few examples.
SOX requires CEOs and CFOs to personally sign-off on quarterly financial reports. It also requires companies to have internal controls to flag irregularities and prevent errors; rapid disclosure of material changes to the company’s operations; and strict audit records and a comprehensive document retention policy which extends all the way down to emails and memos.
Without formal processes and systematic data capture, companies risk inaccurate measures, and too much subjectivity in the financial analyses that CEOs and CFOs must certify. Although formalizing these processes is possible without automation, the right software can reduce costs, improve project delivery, enhance the confidence of all stakeholders, and be a driver for positive change.
By automating their business processes with workflow software that is linked to the company’s financial applications, Project Workforce Management software enables the organization to enforce key processes, validate data at the point of entry, audit transactions, design reports and dashboards, and track all approvals and change requests.
Project Workforce Management facilitates compliance of specific sections of SOX in the following ways:
- Section 302 requires CEO and CFO to sign-off on the accuracy, timeliness, and appropriate internal controls for quarterly financial reports. Project Workforce Management provides audited and effective controls that allow officers to sign with confidence.
- Section 404 relates to the ability of internal controls to intercept and detect any irregular, questionable, or fraudulent activity. Project Workforce Management provides centralized and institutionalized processes for projects, workforce management, financial approvals, and change management, so that data is verifiable.
- Section 409 requires the rapid disclosure of any material changes in the company’s projects and operations, such as a late release of a new product. Project Workforce Management provides detailed work process and project status information to analyze the company’s business in rteal time.
- Section 802 requires the company to establish strict audit records and a comprehensive document retention policy which extends to emails, project plans, timesheets, memos, minutes, reports, proposals, and sign-offs. Project Workforce Management records all operational documents and transactions.
- Section 906 outlines the penalties to officers, including fines and imprisonment, for certifying non-compliant reports under SOX. Project Workforce Management detects questionable transactions and protects assets before problems arise.
Officers cannot and should depend on error-prone, manual systems that can lead to false reports and even serious legal consequences, as demonstrated by Enron, WorldCom, and Arthur Andersen in recent years.
For more details about project management and Sarbanes-Oxley, see Rise of the Project Workforce.
Rudolf Melik is the author of The Rise of the Project Workforce: Managing People and Projects in a Flat World, and is the CEO and a founder of Tenrox. In his writings and speeches, Melik explores the ways that companies can thrive in a world where rapid technological advances and globalization are changing how we get work done and manage the people who do it. Rudolf’s professional blog can be found at: http://www.talentontarget.com/talent_on_target.
- Rise of the Project Workforce, Chapter 10: Project Planning
- Rise of the Project Workforce, Chapter 8: Initiating Projects
- Rise of the Project Workforce, Chapter 9: Workforce Planning
- Rise of the Project Workforce, Chapter 11: Enterprise Timesheet Management
- Rise of the Project Workforce, Chapter 1: The World is Flat, Again
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