SarbanesOxley Issues in Reverse Logistics Electronics Recycling Services Market Requirements New Orl

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Sarbanes-Oxley Issues in Reverse Logistics
Electronics Recycling Services Market
RequirementsNew Orleans, LA May 18, 2005

• Andrew Katcher, MBA, CIA, CISA
• CEO, Rapid Results, Inc.

http//www.headwatersmb.com/content/audio_02.html
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Agenda

• Sarbanes-Oxley an introduction
• Basic Principles
• Implementing Sarbanes- Oxley
• Issues for Recyclers

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Sarbanes-Oxley Origins Flow Chart
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Sarbanes-Oxley An Introduction

• Officially The Public Company Accounting
  Reform and Investor Protection Act July 30,
  2002
• To protect investors by improving the accuracy
  and reliability of corporate disclosures made
  pursuant to the securities laws and for other
  purposes
• Key sections
• Section 302
• The CEO and CFO shall each certify
• The appropriateness of the financial statements
  and disclosures contained in the periodic report,
  and that those financial statements and
  disclosures fairly present, in all material
  respects, the operations and financial conditions
  of the issuer.

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Sarbanes-Oxley An Introduction

• Section 404
• Requires each annual report to contain and
  internal control report.
• State the responsibility of management for
  establishing and maintaining an adequate internal
  control structure and procedures for financial
  reporting
• Contain an assessment of the effectiveness
• Auditor (external) must attest to and report on
  assessment
• Effective fiscal years ending on or after Nov.
  15, 2004

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Elements of Internal Controls (COSO)
Operations
Regulatory/ Compliance
Financial Reporting
Bus units
Internal Control Considerations covered by SOX 404
Functions
Leading practices scope for Sox 404
Control Environment
Risk Assessment
Control Activities
Information Communication
Leading companies are using Section 404 as a
catalyst to review their entire risk framework
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Implementation Overview
Planning
Planning
Execution

• Evaluate design effectiveness
• Evaluate Operating effectiveness
• Test significant controls
• Initial evaluation

• Identify issues and implement corrective actions
• Establish monitoring systems

• Determine significant accounts
• Identify significant processes and business unit
  locations
• Map processes to locations or business units
• Evaluate internal controls at the entity level
• Determine Documentation and testing strategies

• Determine your approach to documentation
• Document Significant Processes and controls
• Address issues as they arise

Managements Report on Internal Controls
Independent Auditors Report on Managements
Evaluation
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Implementation Key Steps

• Document key processes
• Identify what can go wrongs
• Determine key controls (to prevent WCGWs)
• Test key controls
• Remediate deficiencies and re-test

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SOX issues for Recyclers

• Do you have possession of any of your clients
  assets (e.g. Revenue sharing, consignment until
  disposed, etc.?) If so, is the inventory in your
  possession accurately portrayed and controlled on
  clients balance sheet (received timely, proper
  cutoff, justifiable reserves, etc.)
• Are proper controls placed on safeguarding of
  assets? (cycle counts, physical security,
  authorization for credits, etc.) This includes
  information assets on disk drives and
  non-volatile memory
• Are all transactions recorded in proper period
  (timely receipt, timely credits etc.) and insync
  with your clients?

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SOX issues for Recyclers

• 4. Only relevant transactions are being recorded
  (no multiple counts, no fraudulent returns, etc.)
• 5. Controls at third party providers (their data
  accurate, their controls compliant with SOX, have
  you audited their documentation and tested their
  key controls?)
• Do proper audit trails exist for receipts,
  replacements, write-offs, dispositions, scrap,
  etc?
• Has your documentation kept up with your changes
  in operations?
• How accessible is your documentation when your
  clients come to audit?

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Questions

• Andrew Katcher, MBA, CIA, CISA
• [phone]
• CEO, Rapid Results, Inc.
• Andrew_Katcher_at_ hotmail.com
• Thank you for your participation!!!
• If you would like a guide to SOX Speak please
  leave a business card.