Manufacturers are often dealing with many different issues when managing operations. The financial outlook is one of those situations. When it comes to handling the finances of the company, there is often a need to disclose as much information as possible in accordance with federal law. This information is essential because investors of even small companies will want to know how steady the cash flow is, as well as how much debt was accumulated over the course of a quarter. Regulatory compliance on financial information is essential in ERP implementations, including those using Microsoft Dynamics NAV as the platform. That includes the all important SOX compliance.
Making a clear statement to investors
The term SOX refers to the Sarbannes-Oxley Act of 2002. This law changed how financial disclosures were made to companies that publicly trade stock. The law essentially required all publicly traded corporations of any kind to reveal all financial information to the public so that investors can be made aware of what they're investing in. This kind of law was to protect investor from being defrauded by companies with questionable if not illegal accounting practices. That meant making the records electronic, as well as making all electronic communications available for investigation, according to Audit Shark.
Consequently, these regulations can be significant source of concern and anxiety. A survey of chief financial officers from consulting firm Deloitte Group saw that changing regulatory requirements was consistently one of the top reasons for stress. Financial disclosure often means having to pay significant attention to new laws that affects finances, including health care reform, new taxes for equipment and other important matters. With accounting being a core component of any ERP system, implementing a disclosure system to satisfy investors can be extremely important.
The best way to handle SOX compliance is through ERP implementation. Panorama Consulting suggests that imposing a strategy that involves integrating business oversight and the segregation of duties with the software. This way, external and internal audits won't bring up any problems in the long term that harm the business. It will require adding change management to the entire situation to ensure that the organizational structure changes to become more compliant, which means teaching employees and management why maintaining compliance is so important along with why the new ERP system will make operations work better. One of the best ways of ensuring compliance, however, is to bring in auditors as stakeholders during the transition period. They can help the company develop the best method of showing compliance to regulators and the public.
Learn how to define your ERP strategy by downloading the white paper entitled "ERP in Manufacturing: Defining the ERP Strategy" from the DMS website today.