The High Cost of Compliance

What effect has compliance with the Sarbanes-Oxley Act of 2002 and Multilateral Instrument 52-109 had on the Finance departments of large Canadian public companies?

Thanks to a new report from KPMG, we know that senior executives in these companies believe that the effort to comply with the rigorous standards in this new regulatory environment has led to a loss of focus on other key responsibilities of corporate Finance.

This report, Striking the Balance, summarizes the results of a survey of 170 senior executives—CEOs, Presidents, COOs, but not CFOs—of Canadian public companies. The respondents ranked the importance of key Finance functions against the performance of their Finance departments in these areas.

The report focuses on the significant gaps found between importance and performance in functions such as management reporting, budgets and forecasts, corporate finance, risk management and strategic planning, that are directly tied to growth, efficiency and profitability. The gap analysis revealed a significant gulf—between 23%–31%—between the perception of importance and performance in these functions.

And what is the cause of this shortfall? The senior executives put the blame squarely on the new compliance requirements. Although they agree that their Finance departments have successfully met the challenges of the new, stricter regulatory regime, they believe that Finance has done so at the expense of other essential functions that contribute more to the financial health of their organizations.

For a copy of this interesting report, click here.

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Improve Your Environmental Performance

The Energy and Environmental Industries Branch (EEIB) provides a useful (but flawed) research tool that allows you to search for environmental programs available for small- to medium-size Canadian businesses.

The Search page at www.strategis.ic.gc.ca allows you to search by programs by keyword, province or type of program, then click Search and retrieve blurbs about the programs that meet your criteria. So far, so good. However, we’ve discovered that if your organization uses dynamic IP addresses (and many do, including First Reference), the links from these blurbs to the programs themselves do not work. To overcome this, you can use Search to identify the program you’re interested in, then follow the browse links below to locate the program, and link to it. It’s a hassle, but it’s still a good way to find a program that might be worthwhile in your geographical area or business segment.

To browse the database by location, click www.strategis.ic.gc.ca/epic/internet/insf-fp.nsf/en/h_ry00012e.html.

To browse the database by type of program, click www.strategis.ic.gc.ca/epic/internet/insf-fp.nsf/en/h_ry00048e.html.

To browse the database alphabetically , click www.strategis.ic.gc.ca/epic/internet/insf-fp.nsf/en/h_ry00043e.html.

For environmental management policies, see Chapter 5 of Operations and Marketing PolicyPro (OMPP).

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Most corporate, supplier, customer and employee information and data is confidential and proprietary to the enterprise. Confidentiality and privacy must be maintained in order to protect this information, and to comply with the Personal Information Protection and Electronic Documents Act (PIPEDA) and related provincial statutes.

With so much at stake, there is a clear need for organizations to create privacy programs and audit the performance of these programs. Waiting for an incident to occur carries heavy costs that can be avoided by taking preventative steps.

Now, there’s help. Protiviti has recently published Secrets to Developing and Auditing a Corporate Privacy Plan on KnowledgeLeader.com.

And, for a model Privacy policy, see Chapter GV 1.10 – Confidentiality and Privacy in Volume II – Corporate Governance in Finance and Accounting PolicyPro.

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So far this year, both the Privacy Commissioner of Canada and the Ontario Information and Privacy Commissioner have expressed reservations about the explosion in the use of RFID (Radio Frequency Identification) technology, and its potential impact on personal privacy.

Click here for more information about the history of RFIDs and how they work, the types of applications for which they are used, the privacy concerns that the technology has raised, and links to documents from the Office of the Privacy Commissioner of Canada and the Ontario Information and Privacy Commissioner.

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“Metadata” is one of those terms that IT professionals throw around, to baffle the uninitiated. What does it mean? It’s simple: metadata is simply “data about data”, self-referential information in a document, for example, that describes or expands upon the document.

In a Microsoft Word document, for instance, there can be many different kinds of metadata, including the name of the original author, the date it was created, each person who revised the document, and the dates when it was revised. The document can also contain a complete record of all the textual changes of the document and who made them, as well as any annotations or notes made by people who have reviewed the document.

And why should you worry about it? Because a document’s metadata is often hidden, accessed through settings that most average users don’t know about. But that doesn’t mean it isn’t there, stuck to your document like a limpet mine. If the metadata includes information you’d rather keep private, that’s a problem. You might find that confidential information is inadvertently broadcast as your document moves from person to person in your office, or from server to server across the Internet.

Where can you get more information? The Office of the Privacy Commissioner of Canada has published a useful Metadata Fact Sheet. Click here to access it.

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The PolicyPro desktop for FAPP contains a new Supplementary Information Quick Link.

Clicking on the link opens a Supplementary Reference Information page, with links to key articles of interest, many of which have appeared in the PolicyPro Bulletin.

The Supplementary Reference Information page also contains links to information about other products in the PolicyPro Library.

If you're a FAPP subscriber, be sure to follow the Supplementary Information link regularly and check out the latest timely, valuable material we've added.

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About the PolicyPro Bulletin

Editor: Colin Braithwaite, Managing Editor – PolicyPro.

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PolicyPro Bulletin is a complimentary service published by First Reference Inc. and is sent to you monthly. Each issue of the PolicyPro Bulletin provides headlines and summaries of news that affects internal controls and policies in Canada.

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Please send any comments or suggestions about the PolicyPro Bulletin to editor@policypro.ca. For information about the PolicyPro Library, visit www.PolicyPro.ca. For information about First Reference and our HR-related products, visit www.firstreference.com. To read our Terms of Use, Disclaimer, Privacy Policy and other legal matters, visit PolicyPro.ca.

This publication is written for informational purposes only and should NOT be relied upon as legal advice or opinions. The reader should always obtain legal advice from a qualified lawyer or other qualified professional, which will be responsive to the case or circumstance of the individual. Please note that the content provided in this Bulletin or any content contained in or made available through any third party website linked to from this Bulletin, is provided "as is" without representations or warranties of any kind. All representations and warranties in respect of Content or Third Party Content, express or implied, including, without limitation any representations to warranties or conditions regarding accuracy, timeliness, completeness, non-infringement, merchantability or fitness for any particular purpose are hereby disclaimed.

PolicyPro Bulletin ISSN: 1718-5866 Copyright ©2006, First Reference Inc., All Rights Reserved.