|  | | 2004 News and Press Releases | | |
HEADLINE NEWS:
The 404 Maelstrom
Staff Writer
Investment Dealers Digest. December 13, 2004
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EXCERPT: More than 18 months ago, Intel Corp. began the journey to comply with new rules on internal controls for financial reporting set out in the Sarbanes-Oxley Act of 2002, the landmark corporate reform legislation. Given the scope of the work involved, the world's largest chipmaker dedicated two full-time staffers and a budget of $1.5 million to the task. Today, Intel's initial take on the project seems a tad optimistic. So far, the company has invested 250,000 hours-the equivalent of 125 people working full time for a year-to identify, document and test key internal controls. Along the way, the company uncovered 100 key processes and applications critical to the integrity of Intel's financial reporting and documented and tested more than 1,000 key controls. The cost? About ten times expectations. "When we began this exercise, we thought we had a good framework for internal controls around financial reporting," says Jim Campbell, corporate controller of the Santa Clara, Calif., company. "We also had many environmental factors that supported quality financial reporting, including good corporate governance. But we underestimated the effort that would be required to document and test our controls." Now, Intel is nearly finished with the job and, luckily, has no significant problems to report. Unfortunately, that won't be the case for many companies. Some 10% to 15% of the roughly 2,000 companies that have to file early next year-the first batch to do so-are expected to miss their initial reporting deadline. Of those that do make the deadline, between 10% and 20% could announce such serious problems [called "material weaknesses"] that their company's internal controls could be deemed ineffective, with potentially disastrous consequences. |
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