Big4Guy

Sarbanes Oxley compliance requires a company wide effort. Any compliance project to be successful needs to have a project sponsor. Project sponsor acts as the management representative for the project. Companies which are the in the process of SOX compliance need to to have a SOX 404 project sponsor. In one of my earlier posts, I had discussed how Sarbanes Oxley 404 compliance needs to be taken up as a project. A question normally companies face is who should be the project sponsor for Section 404 projects. Though a lot depends upon how a particular company is organized, the are certain guiding principles which should be kept in mind while deciding on the Section 404 project sponsor:

1. Should be a Senior Officer - The first thing to keep in mind while deciding upon a 404 project sponsor is that the person should be a senior officer with credibility. Senior officers normally have a deep understanding of the business processes. Senior officers also have the credibility and experience required for complex compliance projects like 404.

2. Can be CEO or CFO - Section 404 projecct sponsors can be the CEO or the CFO. A lot depends upon the amount of time these officers would be able to 404 compliance. If the CEO of CFO are pressed on time, it is beeter to have the sponsor to be an individual who is able to devote time and direct the entire 404 compliance project.

3. More than One Sponsor - Companies may have more than one project sponsor for 404, in case of multiple operating units and in case of large geographies. It really makes sense to have 404 project sponsors based geographically in case the company is huge and dispersed accross the globe.

4. Chairman of Section 404 Committee - Lastly, in case a company has a 404 committee which reports to the audit committee, the 404 project sponsor can be the chairman of such 404 committee. As the chairman of the 404 committee the project sponsor can give updates to the audit committee on SOX compliance.

Related Posts on Sarbanes Oxley

Concept of Control Deficiency
COSO Components - Monitoring
SOX 404 - Project Management Lifecycle
Disclosure Controls for Sarbanes Oxley