Last week, the accounting firm UHY L.L.P. launched a new service aimed at helping state and local governments in New York comply with financial reporting requirements on Empire State projects that are using some $25 billion in federal stimulus funding.
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Long after the Enron scandal sparked an overhaul of corporate compliance regulation ”“ most notably the Sarbanes-Oxley Act of 2002 ”“ companies face potential new rules intended to provide greater transparency to financial dealings and are scrambling to update their systems and employees on potential changes, and various companies and groups are scheduling forums to assist.
“With all the attention on recent spending by previous recipients of federal bailout money, you can be sure that any state agency, public authority, city or county receiving such funds will be under heightened scrutiny,” said Richard Kotlow, managing partner in the Albany office of UHY, which also has an office in White Plains.
Although many of the requirements are yet to be defined, Kotlow said, federal inspectors will have broad leeway to investigate potential fraud and abuse to ensure adherence to financial transparency and integrity-monitoring.
In Connecticut, Gov. M. Jodi Rell signed an executive order to give the state multiple levels of oversight and transparency over federal stimulus dollars Connecticut is receiving. The state is creating an accountability officer post to ensure that the state provides all reports required by the American Recovery and Reinvestment Act.
It will not be an easy task, according to Carol Carson, executive director of Connecticut”™s Office of State Ethics. The most difficult aspect of the new environment may be measuring how well companies and government agencies are living up to the new expectations.
“It”™s a very hard thing to measure,” Carson said. “It”™s like asking fish to measure the water around them. I mean ”“ we live in it.”
Still, much in the way accounting firms were inundated with business following the Enron scandal, the increased attention could bring additional business for other product and service vendors in the lower Hudson Valley whose offerings help companies track and report various metrics ”“ from giants like Armonk-based IBM Corp. to relatively small entities like White Plains software companies Informa Investment Solutions and Worktopia.
Informa”™s software helps financial firms report the performance of investments made by clients, while Worktopia”™s platform is designed to help companies track the cost of meetings they host or attend.
Purchase-based PepsiCo Inc. is among more than 100 companies currently filing financial forms to the Securities and Exchange Commission under a new format called Extensible Business Reporting Language that allows investors to drill down into details that were far harder to dredge up before.
Many other companies in the area are hiring for compliance managers, including New York Life and Hudson Health Plan.
Under the acronym GRC ”“ for governance, risk management and compliance ”“ think tanks like the Millstein Center for Corporate Governance & Performance at Yale University and the Arizona-based Open Compliance and Ethics Group are attempting to outline overarching rules to help corporations negotiate the innumerable requirements being imposed by government agencies and oversight organizations.
OCEG recently updated its “Red Book” of standards for corporate conduct and management of risk, with some 200 experts contributing to the document.
