SAP and Protiviti Japan Join Forces in Japanese SOX Compliance

tokyoSAP Japan Co. Ltd. and Protiviti Japan Inc. today initiated a new joint business aimed at helping companies to comply with the Japanese version of Sarbanes-Oxley (SOX) legislation.

Note: learning from the flurry of accounting misconduct and to avoid nonconformance the Japanese version of SOX law have been created modeled after the American SOX laws. This law aims to enhance accounting auditing and improve compliance. Financial Service Agency is looking into a compliance law that requires external audit and or audit baseline (considered an amendment to the securities exchange law).

Compliance is an extremely high-priority issue for companies today, and appropriate compliance can be a major factor in boosting corporate value. When it comes to compliance, there is an urgent need to comply with legislation that requires companies to put in place internal control systems surrounding financial reporting, as typified by SOX.

Under such circumstances, SAP Japan and Protiviti Japan will join partnerships in marketing and in providing service and products. SAP Japan provides its mission critical business packages to companies for years and Protiviti Japan possess a wealth of experience in providing companies working to comply with the Sarbanes-Oxley Act in the U.S. As their first joint effort, the two companies have now teamed up to provide a package that integrates SAP’s solution “SAP MIC(Management Information Control)” and Protiviti Japan’s RCM (risk control matrix), a template for internal control documentation.

Combing SAP MIC with the Protiviti Japan’s RCM templates will allow companies that are required to comply with the Japanese version of SOX to more efficiently create internal control documentation, a compliance process regarded as most labor-intensive.

The following are the features of SAP MIC and Protiviti’s RCM, which have been integrated.

SAP MIC conforms to the COSO framework of the U.S. Therefore, along with (1) already having provisions for the information input categories required for the creation of internal control documents, it also incorporates process support functions such as (2)”definition of control scope,” (3)”evaluation of the design of the internal control system,” (4)”operation evaluation,” and (5)”management sign-off,” and thus can be used to manage the overall internal control construction project.

Protiviti Japan’s “Standard RCM” has been developed as a tool to efficiently conduct internal control documentation on “financial reporting objectives” which are the target of outside auditing, and it contains descriptions on process-level internal control about financial reporting in every business process. This “Standard RCM” is a set of standard templates systematically organized in the matrix format on business-process-related control objectives (assertion), risk control and so forth. It also comes with simple flow charts of every business process. As one of its distinctive features, Protiviti Japan redeveloped “Standard RCM” to specifically meet Japanese accounting standards based on knowledge on internal control evaluation accumulated though the consulting activities carried out on a global scale by Protiviti. It is planned to be offered from March of next year.

SAP Japan offers mySAP ERP as an internal control solution. The individual functions that support the control of accounting, marketing, procurement, human resources, and production activities—the key elements of this solution—are fully integrated. As a result, the integrity of the data is ensured. If data is changed proper control is accomplished thanks to automated change logging and the maximum amount of transaction will be configured thus the compliance structure can be easily incorporated into daily operations. Furthermore, in the past few years SAP Japan has been enhancing support in the area of compliance, and now offers the following functions: 1) SAP SEM (Strategic Enterprise Management risk management), 2) whistle blower, 3) SAP AIS (Audit Information System, 4) SAP MIC (Management Information Control), and 5) SAP Compliance Calibrator.

Since announcing the ESA (Enterprise Service Architecture) concept in May 2003, SAP Japan has been offering its client companies the solutions that they are seeking by using not only SAP applications but also the SAP NetWeaver platform that makes it possible to link with products from other companies. This combination of content developed by Provititi with an SAP application represents one example of an ESA implementation, and SAP is confident that it will help reinforce the efforts of mySAP ERP user companies to comply with the Japanese version of SOX.

Going forward, SAP Japan and Protiviti Japan will work even harder with their business partners as the partners strive to enhance the “efficient and sustainable” internal control solution wanted by their client companies, and SAP Japan and Protiviti expect to deploy this solution at about 50 companies by the end of 2006.