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Sunday, 15 April 2007 |
On
March 22nd, Michael Dell the founder and CEO of
Dell, Inc. at a
Customer Reception in Tokyo, Japan remarked
on the planned implementation of the so-called J-SOX laws in April of
next
year. He stated that "it's increasingly important for Japanese
companies to
review their database management and information security procedures to
structure and comply with enhanced legal requirements for internal
controls." In order to provide support,
Dell has put in place a specialized team for Japanese customers to
ensure that
we can provide the right solution and the best experience to its
customers. Like with SOX in the US, IT and accounting companies are
seizing on the new rules as new revenue streams. Oracle Japan is
offering software and
consulting services to small and medium-sized companies for helping
them
comply. IDC Japan is estimating that the
J-SOX compliance market will reach 260.7 billion yen (over $2B) in 2008
with
most of than money flowing into IT upgrades.
According to Forrester Research Services firms already focused on J-SOX
include:
- Deloitte (Tohmatsu)
-
Ernst & Young (Shin Nihon)
-
KPMG (Azusa)
-
Misuzu
-
PricewaterhouseCoopers (Arata)
-
Protiviti
Also according
to Forrester Research Software firms focused on
J-SOX include:
- Achiever Business Solutions
- BWise
- OpenPages
- Oracle/Stellent
- Paisley
- AP
So why does the CM community care?
Like SOX, J-SOX will need the
rigors, processes and management of software configuration tools, software and
the people to support and implement these solutions.
So I understand Sox, but what is J-Sox.
Commodore
Matthew Calbraith Perry opened a largely closed Japanese society to the Western
world on July 8, 1853, when he arrived in Edo (Tokyo) bay [1].
Commodore Perry and the Treaty of Kangawa signed in 1854 allowed US
vessels access to Japan's port and is widely credited with the triggering the
modernization of Japan. More than 150 plus years later "J-SOX" the nickname of
Japan's Financial Instruments and Exchange Law, which was promulgated on June
14th, 2006, is becoming a common term in corporate governance. Inspired by
corporate scandals such as the Livedoor[2] and Murakami Fund[3] , the law has been dubbed "the Japanese
version of the Sarbanes-Oxley Act," hence J-SOX. "This is just like the early stages of
Sarbanes-Oxley - nobody really knows" the specific requirements yet, said
Michael Pellegrino, vice president of IT at Fuji Photo Film U.S.A. Inc., a
Valhalla, N.Y.-based subsidiary of Tokyo-based Fujifilm Corp[4].
As Friedman said the world is getting flat. Businesses' are learning from the mistakes
made by individuals and corporations across the globe. J-SOX, officially known as the Financial
Instruments and Exchange Law, is scheduled to go into effect in April 2008 for
roughly 3,800 companies listed in Japan, along with their foreign subsidiaries[5].
Challenges and difference J-Sox and
Sox.
Forrester Research lists the following
challenges and difference between J-SOX and SOX:
- Professional
services. Japan has
fewer than 10% of the number of qualified accountants than the US.
- Independence of
auditors. While the concept of auditor independence exists in the Japanese
market similar to the US,
many Japanese firms can and will rely on the influence and recommendations
of their audit firms.
- Audit
automation is critical. With the extreme shortage of auditors compared to
US per capita numbers, this shortage will increase the requirement and
necessity for process efficiency in the internal audit process and
software that can support these processes.
- Support
of IT governance. In the November guidance regarding the scope of the
J-SOX process, it is clear that IT controls are a central point of focus
for J-SOX
David Lipien is a Senior Managing Consultant
with IBM's Global Business Services Financial Services Insurance practice. He has
over 10 years of IT Systems Development and Leadership experience. He has
expertise in all phases of the project life cycle and experience in numerous
roles, including project manager, senior business analyst, and programmer.
Specialties include internet-based technologies, wireless and object-based
project methodologies.
[1] Friedman, Thomas L. The World if Flat, New York NY,
2007 page 139.
[2] An Internet service provider based in Tokyo, Japan,
that runs a Web portal and numerous other businesses. The media reported
allegations of securities fraud (including window dressing and share-price
manipulation) on January 17,
2006, prompting panic selling on the Tokyo Stock Exchange as
investors tried to unload share.
[3] Outspoken investment fund manager Yoshiaki Murakami
arrested for alleged insider trading linked to his investment fund's purchase
of Nippon Broadcasting System Inc. shares between late 2004 and early 2005.
[4] ComputerWorld Thomas Hoffman March 17, 2007
[5]
http://www.fsa.go.jp/en/index.html,
Financial Services Agency, The Japanese Government
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