After interviewing former SEC Chairman Arthur Levitt in the restaurant of New York City's Cornell Club, we took the escalator to the fourth floor where a packed room awaited his perspective on Sarbanes-Oxley. After his speech, Levitt, along with an industry panel, answered questions from the audience.
What kept coming up time and time again was how important technology would be in determining accurate, objective financials for public companies. (Sarbanes-Oxley mandates that all public companies' CFOs and CEOs sign off on a firm's financial statements.)
Technology is becoming one way to facilitate the accuracy of these numbers, allowing for an auditable trail of checkpoints along the way. It calls for an overhaul of the processes that failed so miserably in cases such as Enron.
After contemplating the discussion, I asked, "Considering technology is critical to creating a valid picture of the companies well being, do you think a company's top technology officer will ever be included in the final sign off - ultimately sharing the liability with the CFO and CEO?"
The room went quiet. I think several CIOs were holding their breath hoping, of course, that the answer would be no. After mulling over the question with his panelists, Levitt simply replied, "No."
As I was packing up my belongings, several attendees gathered around me. All had the same perspective, "He didn't give you a good answer to your question," said one attendee. Another noted, "That's the only way to ensure that these numbers will be accurate. The technology side has to work with the CFO and the CEO on this. The CIO has to feel equally responsible in order to come up with the best working solution." Others agreed.
Heading out of the building a few more attendees approached. One, who must have assumed I was a CIO, said I should be required to sign off somewhere along the line - whether it was the final sign off, he wasn't sure.
The following week, an InformationWeek panel debated Sarbanes-Oxley implications. There panelist Richard Rzasa, CIO of TD Waterhouse, made a telling statement. He said, "The regulation does not hold the CIO liable but if the CIO signs something somewhere along the chain that's inaccurate, the CIO's career is over."
That statement should serve as a wake-up call to all CIOs. Whether the CIO will ever be asked to formally validate a company's financials is irrelevant. What is relevant is the CIOs leadership in restructuring processes and technology around Sarbanes-Oxley. As Rzasa notes, it can make or break a CIO's career.