SOX Compliance – Is Your Project Costing system up to it?

SOX Compliance – Is Your Project Costing system up to it?

OK, so I’d like to clear something up. Some time ago we wrote a White Paper discussing what makes accounting in the construction / engineering sector different to other industries. The conclusion was that there is nothing terribly different about accounting in the AEC sector but it can appear to be different and more difficult due to the complex nature of project costing. And to make it potentially more confusing, add project management into the mix.   And this is where usability and a centralised and integrated system become very relevant.

What do I mean by that exactly?

One of the things we have observed over time is that Project Managers are busy people.  They are managing an enormous number of things at any one time –evaluating pricing, working out who are the least risky and most professional sub-contractors  to work with, sending out RFI’s, keeping track of the cost of a project vs where it is right now from a forecasting perspective and managing change-orders.   In addition to that there is lots of subjective information as regards to all the various registers that need to be maintained from a legislative perspective, correspondence tracking, site meetings, the list goes on….

According to Margaret Rouse from www.whatis.com – “Project management is a methodical approach to planning and guiding project processes from start to finish. According to the Project Management Institute, the processes are guided through five stages: initiation, planning, executing, controlling, and closing. Project management can be applied to almost any type of project …..”

How well does an accounting system do all of this and is it logical to expect it to?  Accounting systems do what they do very well, which is account for historical numbers, in a very rigid way, so that if an auditor decides he wants to check the books, it is easily achieved.  But take that a step further in regards to Sarbannes Oxley (SOX) which states:

Sec. 802(a)(2) “The Securities and Exchange Commission shall promulgate, within 180 days, such rules and regulations, as are reasonably necessary, relating to the retention of relevant records such as work-papers, documents that form the basis of an audit or review, memoranda, correspondence, communications, other documents, and records (including electronic records) which are created, sent, or received in connection with an audit or review and contain conclusions, opinions, analyses, or financial data relating to such an audit or review.”

Where does all of this this leave us?

Well clearly, in order to be SOX compliant you need to be able to present the project team with a system THEY WILL USE.  It’s one thing to have a system in place, but if it is too unwieldy, people being people, will resort to their old well-worn methods, usually spreadsheets, that puts the organisation back in the risk game.

So really, when you look at what project centric business do, it’s way more than counting up the dollars won (or lost) during the course of the project.  It’s about audit-ability across the board and making sure that the method of data collection is something that your Team can achieve without it being a hindrance to their day to day work.

Which is why when IPM was designed, it was with usability and compliance in mind.

admin

Comments are closed.