Source: Robin Roth, Senior Contracts Editor, Conferon, Inc.
E-Specs: August 3, 2004

Flurries of publicity swirled in the news when Congress passed the Sarbanes-Oxley Act ("SOX") in 2002 in response to the rampant accounting abuses that embroiled corporations such as Enron, Arthur Anderson, WorldCom, and Tyco. Tightened reporting requirements were enacted, primarily for publicly traded corporations. Associations are not affected since their meetings generate revenue (but SOX can be a best practice) and neither are most corporate incentive programs if the programs adhere to legitimate rules of qualification. SOX is in the news again because the phased-in requirements for compliance now affect most large corporations (those whose fiscal years end on or after June 15, 2004).

The impact on the meetings industry is that the end should justify the means: a meeting's goals and objectives should justify writing off its expense. Big spending must not be abusive. The annual report must now contain an "internal control report," approved by an independent auditor that details procedures for financial reporting. Corporations should document (process map) and more rigidly comply with an internal meeting and expense approval process. Planners will now face requirements for a detailed travel policy and tighter rules for expense reporting. Basically, if you have a documented process, you need to adhere to the rules. Say what you do and do what you say.

One of our large corporate clients reports that requirements for site selection have expanded tremendously. There must be an RFP, at least three bidders, and if the lowest bid is not selected there should be an explanation of why. Additionally, three or more management personnel may need to sign off on the final decision (more of an internal procurement request). The upshot is that the paper work and bureaucracy involved in the decision process is on the rise in the world of large corporations.

The actual text of the section of the law that requires the internal report, H.R.-3763 Sec. 404 (Public Law 107-204, 116 Stat. 175 {2002}), is barely over 100 words but the final Rules that the SEC developed are very complex. See this link:
http://www.sec.gov/rules/final/33-8238.htm#ia" http://www.sec.gov/rules/final/33-8238.htm#ia

If you’re not sure whether SOX applies to your organization or what adjustments to your processes may be needed to comply, consult with your financial department or auditor.