Accounting Firm SingerLewak Expects a Rise in Governance, Risk and Compliance Vulnerabilities in U.S. Corporations Following the Government’s $700 Billion Bailout Plan
Leading California Accounting and Consulting Firm Seeks to Advise America’s Executives To Tighten Internal Controls Now
By: PR Newswire
Oct. 13, 2008 05:00 AM
LOS ANGELES, Oct. 13 /PRNewswire/ — SingerLewak, a full service accounting and management consulting firm headquartered in Los Angeles, today issued a Governance, Risk and Compliance advisory following the federal government’s authorization of the $700 billion bailout plan of the U.S. financial system. Analysts with the firm’s Enterprise Risk Management Services practice forecast that the hotly debated economic rescue of U.S. financial institutions could trigger an increase in vulnerabilities to the internal controls of public and private companies.
According to Troy Snyder, Lead Partner of SingerLewak’s Enterprise Risk Management Services practice, the current uncertainty in the markets and the global economy could directly result in a significant percentage increase of U.S. corporations facing security compromises and financial liabilities.
“With the $700 billion government bailout plan, the potential fallout could affect a company’s risk profile due to less people and smaller budgets to detect fraud. As such, inappropriate employee behavior can seriously compromise the integrity of the corporate structure,” cautioned Mr. Snyder.
Mr. Snyder further specified that among the highest concerns are the risks posed by unsettled and edgy employees whose behavior can lead to actions such as fraud, theft of sensitive proprietary data, or critical intellectual digital property, through the inappropriate use of information systems resources.
“In past times of general financial instability, it has not been uncommon to see a weakening in the internal controls of businesses struggling to survive in unfavorable market conditions,” Mr. Snyder commented. “Although initially helpful to quell investor unease, the $700 billion bailout plan has the very real potential to adversely affect the risk profile of a broad spectrum of corporations, due to workforce reductions, budgetary cutbacks and other factors known to compromise the integrity of the corporate infrastructure.”
To provide historical perspective, Mr. Snyder recalled the lack of enthusiasm that greeted Sarbanes-Oxley controls immediately following legislation mandating them in 2002.
“Internal control measurements over financial reporting systems were the focus of the Sarbanes-Oxley Act of 2002,” Mr. Snyder stated. “SOX was created to strengthen regulations for corporate governance, internal control assessment and enhanced financial disclosure, following the Enron, Tyco and WorldCom fiascos. Reluctance by many companies to implement Sarbanes-Oxley’s internal controls fully may now become evident in the form of weakened corporate systems platforms, possibly exposing the cracks in otherwise reliable financial reporting systems, information and security foundations.”
Employee Behavior Management: What Controls Need to Be Tightened:
Due to the historic reluctance of U.S. businesses to implement Sarbanes- Oxley, weaknesses can occur in the Internal Controls of any organization, necessitating some or all of the following actions:
— Fraud prevention and detection
— Strategies and safeguards to prevent employee misappropriation of
— Documentation and systems implementation to deter misstatements
— IT Security for prevention of unauthorized access via internal or
— Loss prevention strategies to thwart financial malfeasance and asset
As a proactive response to thwart the possibility of greater risk within organizations, Bob Green, CPA.CITP, SingerLewak Enterprise Risk Management Services partner and Information Management expert, suggested corporate officers and executives begin by having an internal controls assessment and diagnostic performed.
“The first step is to evaluate the controls in place in order to reduce inappropriate employee behavior relating to the use of a company’s systems and resources,” said Mr. Green. “Limiting the possibility of theft and misuse of corporate intellectual property and other sensitive digital information by employees is essential. Our specialized Employee Behavior Management initiatives help both public and private companies mitigate risks posed by employees who may foster an ‘anything goes’ mentality during challenging economic times.”
As a professional courtesy to the business community, SingerLewak’s Enterprise Risk Management Services practice partners offer telephone briefings and seminars for executives interested in finding out more about mitigating Governance, Risk and Compliance Vulnerabilities for their organizations.
Getting the Right Tools Implemented:
Information about EBM services and how to tighten your Internal Controls and protect your business can be obtained by contacting Troy Snyder or Bob Green at 310-477-3924 or sending an e-mail to MarketingLA@SingerLewak.com. Members of the media are invited to contact Ronit Koren at (310) 948-6237 or rkoren@SingerLewak.com.