Managing With Your SOX On

1
Managing With Your SOX On

• A look at Project Management within
  Sarbanes-Oxley
• Chris Carter, PMP

2
Agenda

• About Me
• Sarbanes-Oxley Overview
• What is it
• Who does it effect
• Sections of the Law
• Key PM Focus Areas
• A Look Ahead
• QA

3
About Me

• Chris Carter, PMP
• Consultant - Sogeti, USA
• PM on 4 Sarbanes-Oxley Projects
• PM 6 years
• Consultant 9 years
• IT 11 years

4
Imagine

• You are Project Manager
• Project may be over budget
• Manager or client is not asking

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Example Project

• Goal Build a power plant in 2 phases
• Estimated Total Cost 2.8 billion
• Phase 1
• 3 billion

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Actual Project

• Enrons Dabhol Project
• 1992 to 1999
• Bethany McLean and Peter Elkind, The Smartest
  Guys in the Room - The Amazing Rise and
  Scandalous Fall of Enron, 2004

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SOX What is it?

• Sarbanes-Oxley Act of 2002
• AKA Sarb-Ox or SOX
• Passed in June 2002
• Addressed regulatory lapses
• Protect shareholders and general public
• Accounting Errors
• Fraudulent Practices
• WorldCom, Tyco, Adelphia, and Enron

8
SOX Who Does it Effect?

• All publicly traded companies
• Adequate internal control structure and
  procedures for financial reporting
• Puts responsibility on CEO and CFO
• Effects all individuals dealing with financials
  or operations
• Focuses on controls and procedures

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SOX Sections

• Sections 101 - 108
• Creation of Accounting Oversight Board
• Defines Accounting Firm registration
  responsibilities
• Section 201
• Defines prohibited services for Accounting firms
• Section 302
• Corporate responsibility for financial reports
• CEO and CFO certification

10
SOX Sections

• Section 304 306
• Penalties Pay back bonuses and profits from
  stock sales
• Section 404
• Effective IT and financial controls
• Security
• Traceable and auditable
• Budget control
• Section 409
• Real time exposure of financial conditions

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PMs Key Responsibilities

• Control and Monitor Projects
• Evaluate and Mitigate Risks
• Communicate and Disclose Information
• Ensure proper Procurement Management
• Act Ethically

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Control and Monitor Projects

• Project Managers should
• Manage scope and scope changes
• Forecast project costs and expenditures
• Foresee and anticipate overruns
• Provide proof and justification for variances
• Communicate project deviations

13
Control and Monitor Projects (cont)

• Tools
• Integrated Change Management
• Value of Work analysis / Earned Value Management
• Monthly Forecasting of Cash Flows
• Historical Information
• Disciplined Estimation Techniques

14
Evaluate and Mitigate Risk

• Project Managers should
• Plan for risk
• Analyze project risks
• Mitigate risks
• Communicate realized risks and project effect

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Evaluate and Mitigate Risk (cont)

• Tools
• Risk Management
• Team Risk Analysis
• Risk Mitigation
• Frequent Communication

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Communicate and Disclose

• Project Managers should
• Provide timely disclosure of changes in project
• Know and communicate the state of the project
• Cost
• Schedule
• Scope
• Quality
• Identify and communicate project issues

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Communicate and Disclose (cont)

• Tools
• Communication Plan
• Who, What, When, How
• Status reports with schedule and financial
  information
• Monthly forecast of cash flows

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Procurement Management

• Project Managers should
• Follow a defined procurement process
• Eliminate possibility of impropriety
• Ensure vendor conflicts do not exist
• Monitor sub-contracted areas of responsibility

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Procurement Management (cont)

• Tools
• Require frequent status reports
• Ensure proper acceptance controls
• Use the right contract-type
• PM involvement in procurement process

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Act Ethically

• Project Managers should
• Be honest about project
• To self
• To others
• Face the truth about a project
• Tell truth in communications
• Follow the right processes
• Not put personal gain over project needs

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Act Ethically (cont)

• Tools
• PMIs Code of Professional Conduct

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SOX / PMI Mapping

• Sarbanes Needs
• Scope Control
• Financial Controls
• Risk Transparency
• Information Disclosure
• Ethical Leadership

• PM Processes
• Scope Management
• Cost Management
• Risk Management
• Communications Management
• Code of Professional Conduct

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Looking Ahead - Cause

• Sarbanes-Oxley is changing how companies operate
• Project Control
• Visibility and Transparency
• Disclosure and Communication

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Looking Ahead - Effect

• Project Managers are becoming more accountable
  for projects
• Increased frequency in communication
• More detailed project disclosure
• Focus is being placed on managing and mitigating
  risk
• Increase in organizational processes and
  procedures
• PMO initiatives are on the rise

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Looking Ahead - Opportunity

• Driving force for profession of Project
  Management
• Increased demand for PMPs
• More opportunities for methodical PMs
• Need for experts in Risk Management

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Summary

• Sarbanes-Oxley requires control and management of
  projects
• Project Managers should use PM tools and
  techniques
• SOX is a catalyst for mature PM processes
• SOX represents an opportunity for the growth of
  the PM profession

27
Questions and Answers

• Chris Carter, PMP
• Chris.Carter_at_sogeti.com
• Chris.Carter.PMP_at_gmail.com
• [phone]