The Boom in Governance Advisory Services

The Big Four and midtier accounting firms, consultancies, law firms, and technology vendors are vying to help organizations comply with tough new laws. Here's how to find the best products and services at the most reasonable cost.

Call it Sarbanes-Oxley Compliance Syndrome. Stage One was characterized by denial, as finance executives reacted with shock and disbelief to the accounting scandals that triggered the new legislation: "We're not that kind of company. That could never happen here." Stage Two set in after CFOs and CEOs signed on the dotted line to satisfy the law's initial certification requirements. This stage was marked by sleeplessness and lingering uneasiness as leaders pondered the question "What exactly have I certified?" Most board members and senior executives have now progressed to Stage Three, in which mounting anxiety drives them to look outside the organization for remedies.

Dave Murray, CFO of Longview Solutions, a performance management software vendor based in Markham, Ontario, believes that bulging

workloads are another factor fueling the drive toward compliance assistance. "A good example of that is a midsized, rapid-growth company that may now be in excess of $1 billion in revenue, has operations in countries it didn't know existed four years ago and is trying to pull together uniform numbers," he says. "That's the core of what Sarbanes-Oxley is trying to get to. It's saying: 'Finance people, it's time for you to get your organization in shape.' "

There is no shortage of providers waiting to help finance people do just that. Since the act was signed into law in July 2002, CFOs, CEOs and board members have been bombarded with marketing materials from professional services firms promoting everything from quick compliance fixes to massive overhauls of finance and accounting processes and the company's internal control infrastructure. Big Four firms, second-tier accounting firms, management consultants, corporate lawyers, governance consultants and software vendors are all hawking their own versions of compliance remedies.

The Best Help at the Best Price

The key to compliance is finding the best help at the most reasonable cost. Company size, solution type and compliance approach are just some of the factors executives and boards must weigh as they evaluate offerings.

"There are two types of customers," notes Philadelphia-based Bob Rizitello, head of the corporate accountability review practice at consulting, technology and outsourcing services provider Cap Gemini Ernst & Young. "One type [of company] performs the minimum on the compliance spectrum. The other company asks, 'How do we get business value out of this?' "

CGE&Y's corporate accountability review extends beyond compliance issues to help companies strengthen their overall finance, accounting and performance management processes. Companies that invest in the review "take a hard look at a lot of the initiatives they had on the back burner to improve financial systems," Rizitello says, "and then ask whether these are the things [they] need to do to ensure investor confidence in the future and deliver what [they] need internally in the short term."