Section 409 SOX 1479

  • Hello everybody,
    does anybody know which impact section 409 ‘Real Time Issuer Diclosures’ can be related to the IT department?
    Thank you

  • Hi,
    Sarbanes Oxley 409 Item 12 of Form 8 K
    (effective March 28, 2003: applies to earnings releases and similar materials made on Form 8 K after March 28, 2003)
    Company must furnish Form 8 K to SEC within five business days of any public announcement or release disclosing material non public information regarding company’s results of operations or financial condition for an annual or quarterly period that has ended. Companies are not required to issue earnings releases or announcements, but issuance of release or announcement must be identified in Form 8 K and included as an exhibit.
    The requirement leads to some complication as there is confusion as to how materiality is defined for compliance purposes.
    For example, are these events material?
    Loss of a major sales contract to a competitor?
    Cancellation of a significant partnership agreement?
    Cost overruns on IT projects and other capital expenditures?
    A large marketing expenditure?
    The impact to IT can be significant:

    • Many companies have heavy reliance in operational systems on batch
    • Existing BI infrastructure can’t handle updates in real-time.
      Also, what does real-time mean?
      It has been previously pointed out that reporting on a material change two days after it occurred is not real time. Howver, reacting to one is.
      Also, do the responsible employees know what constitutes a material change?
      It should be noted that many IT infrastructures cannot handle real-time changes. Also, there is a lack of integration between data, processes, and technologies. Critical links between systems are not robust or documented. Moreover, there is no repository of quality, current data.
      Thus, the next evolution of deplying IT to aid in compliance efforts will certainly involve setting up systems to automatically notify all key constituents (senior execs, board members, investor-relations managers) of material events and achieve transparency.
      Hope this helps,

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