Why More and More Companies Are Using Leasing as a Compliance Tool
Every business day, regulatory requirements like the 2002 Sarbanes-Oxley Amendment are increasing attention on IT asset tracking and financial reporting at organizations across the United States. Seemingly minor omissions and errors can put organizations at risk for audits, fines, or even worse.
Section 404 of Sarbanes-Oxley requires organizations to attest to the internal controls and accuracy of their mission critical information. This includes both the information inside their IT systems, as well as the information about the IT infrastructure itself.
Sarbanes-Oxley also requires organizations to disclose all material financial exposures they have. In defining risk, organizations need to consider all aspects that may lead to financial misstatement, including misstated depreciation, and overstated balance sheet exposure.
Unfortunately, because of the dynamic nature of technology, IT assets are often difficult to track in such an accurate manner.
Technology leasing can help you stay compliant within this new regulatory environment, as you maintain a flexible, high-performance infrastructure to meet your business needs.
Challenges of the IT Environment
Our customers' IT environments are rapidly evolving as internal needs change and new offerings and technologies emerge. Upgrading, replacing, or consolidating vs. add-a-footprint trade-offs are being evaluated somewhere in the infrastructure on an ongoing basis. Studies of our customers' IT portfolios show that up to 90% of IT infrastructure experiences some level of change within its projected useful life.
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Living with technology decisions can be even harder than making them, and organizations need to be agile enough to alter their course quickly. These dynamics make asset tracking, financial reporting, and compliance even more of a challenge. Many organizations are unable to completely track IT investments that leave or enter their environments, or the detailed financial exposure related to all individual investments. In some cases, we have found up to 10-20% of an organization's IT assets are misreported or inaccessible.
Traditionally, these variances were often evaluated as immaterial overall and not worth the effort to resolve. However, the standards and ramifications have changed. With new regulations and stricter interpretations of GAAP standards, the definition of materiality has changed for both financial and regulatory reporting. To make matters worse, state and local disposal regulations are becoming increasingly stringent.
Against the backdrop of this tightening regulatory climate, it's important to know that you can look to technology leasing as a highly effective compliance tool.
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