Question

Imagine you are an IT manager at small retail organization that has a new owner. The new owner is from another industry and has expressed a lack of understanding of some of the controls and processes important to IT management and governance. You must help the new owner with understanding these important concepts.  

Write a 2- to 4-page executive brief that details the following:

• How the 2002 Sarbanes-Oxley Act has affected IT governance, including the major provisions of the act and how this might affect IT, and how IT might assist in compliance
• How IT policies, standards, and procedures can be used to determine if the enterprise is in compliance and support the IT strategy
• How Quality Management Systems (QMS) are important in assuring quality processes are in place
• How IT management and monitoring of controls can be used to asses IT performance

Answer 1

After a prolonged period of corporate scandals (e.g., Enron and Worldcom) in the United States from 2000 to 2002, the Sarbanes-Oxley Act (SOX) was enacted in July 2002 to restore investors' confidence in the financial markets and close loopholes that allowed public companies to defraud investors. The act had a profound effect on corporate governance in the US. The Sarbanes-Oxley Act requires public companies to strengthen audit committees, perform internal controls tests, make directors and officers personally liable for the accuracy of financial statements, and strengthen disclosure. The Sarbanes-Oxley Act also establishes stricter criminal penalties for securities fraud and changes how public accounting firms operate.

KEY TAKEAWAYS

• The Sarbanes-Oxley Act of 2002 was passed by Congress in response to widespread corporate fraud and failures.
• The Act implemented new rules for corporations, such as setting new auditor standards to reduce conflicts of interest and transferring responsibility for the complete and accurate handling of financial reports.
• To deter fraud and misappropriation of corporate assets, the Act imposes harsher penalties for violators.
• To increase transparency, the Act enhanced disclosure requirements, such as disclosing material off-
• off-balance sheet arrangemets. What Does The Sarbanes-Oxley Act Do?

• One direct effect of the Sarbanes-Oxley Act on corporate governance is the strengthening of public companies' audit committees. The audit committee receives wide leverage in overseeing the top management's accounting decisions. The audit committee, a subset of the board of directors consisting of non-management members, gained new responsibilities, such as approving numerous audit and non-audit services, selecting and overseeing external auditors, and handling complaints regarding the management's accounting practices.

• A quality management system (QMS) is defined as a formalized system that documents processes, procedures, and responsibilities for achieving quality policies and objectives. A QMS helps coordinate and direct an organization’s activities to meet customer and regulatory requirements and improve its effectiveness and efficiency on a continuous basis.

• ISO 9001:2015, the international standard specifying requirements for quality management systems, is the most prominent approach to quality management systems. While some use the term "QMS" to describe the ISO 9001 standard or the group of documents detailing the QMS, it actually refers to the entirety of the system. The documents only serve to describe the system.

  BENEFITS OF QUALITY MANAGEMENT SYSTEMS

  Implementing a quality management system affects every aspect of an organization's performance. Benefits of a documented quality management system include:

• Meeting the customer’s requirements, which helps to instill confidence in the organization, in turn leading to more customers, more sales, and more repeat business
• Meeting the organization's requirements, which ensures compliance with regulations and provision of products and services in the most cost- and resource-efficient manner, creating room for expansion, growth, and profit

• These benefits offer additional advantages, including:

• Defining, improving, and controlling processes
• Reducing waste
• Preventing mistakes
• Lowering costs
• Facilitating and identifying training opportunities
• Engaging staff
• Setting organization-wide direction
• Communicating a readiness to produce consistent results.