Many public corporations have spent millions of dollars over the past few years building processes and automated software tools to track key measures needed to prove compliance with the Sarbanes-Oxley Act (“Sarbox”). But what if this critical information could instead be managed using the same strategic dashboard tool that you use to execute your overarching business strategies?
This is, in fact, what some clients have done, using dashboards designed and managed by their Finance departments. Rather than representing a truly “balanced” scorecard (as is more typical for our clients), these dashboard focus on areas of strategic importance to this one functional area in the company. And one area of intense focus for publicly held companies is clearly Sarbox compliance.
In some ways, these KPI (key performance indicator) dashboards can represent a cascade of the corporation’s top-level scorecards –- and they provide tremendous additional value in supporting this key financial reporting responsibility. They are used to track areas of Sarbox compliance such as “Percentage of Balance Sheet Accounts Reconciled by Deadline,” “Dollar Value of Balance Sheet Non-Current Reconciling Items,” and “Number of High-Risk Internal Audit Comments.”
Since ActiveStrategy Enterprise software allows drill-down to as many layers of detail as desired, when a “red stoplight” appears next to a top-level indicator, such as “Percentage of Compliance Measures Meeting Goal,” the Finance Director can click to drill down into the underlying detailed measures and look for root causes of the problem (i.e., the detailed issues that are really driving the measure to miss goal). Then, resources can be assigned to improve performance in that area and correct the problem. The improvement initiatives themselves can also be tracked and reviewed using the software's Initiative Management functions.
Since these types of dashboards and measures are being used for federal compliance, and there is a legal responsibility involved, one question that might arise is whether one can control the definitions of the compliance measures to prevent employees from changing the calculations or otherwise tampering with the measure results.
In the software, this can be accomplished using something called an “Owner-No Edit“ setting. The owner of a measure can enter data and run reports, but the owner has no access to the underlying definition of the measure. In this way, central control over the measure definitions can be demonstrated irrefutably, should the need occur in an audit.
So a strategic dashboard can indeed be used to monitor and report on Sarbox compliance measures. The advantage is that the same dashboard, and its cascaded measures, can be used to drive strategic improvements, correcting any issues in these same Sarbox areas. In addition, these dashboards can be used to track and improve performance in other areas –- which will be the subject of a follow-up article on this blog.
How do you currently track Sarbox compliance? Have you ever thought about merging these efforts with a strategic management dashboard? Would this work in your organization? Tell us about it.
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