IT Governance, Risk, and Compliance » Organization of American States

Application Protection – Part IV

Robert Davis — Mon, 22 Jun 2009 20:41:36 +0000

The FCPA impacts IT control requirements of U.S. publicly held enterprises. Section 78m (b), in particular, documents the legislative rules and compliance requirements of internal control evaluation reporting with regard to management’s assessment of internal controls. Section 78m (b) (2) through (5) applies to Securities Exchange Act of 1934 filers. Therefore, the FCPA can affect an organization’s internal control environment by indirectly imposing management’s assurance of an adequate IT control environment with adequate information protection. Based on the Public Company Accounting Oversight Board’s interpretation, the SOX IT control parameter, in effect, is the same as that of the FCPA. Therefore, U.S. Securities Exchange Act of 1934 filers may not be aware of FCPA legal requirements — yet, they should have been performing the necessary FCPA control self-assessments and remedial actions since 1977. Similarly, European Union, OAS, and OECD member countries should be engaging in control self-assessments and remediation of internal accounting controls as they relate to safeguarding information assets to ensure compliance with legal mandates.

“View Part I of the Application Protection series here”

Application Protection – Part III

Robert Davis — Fri, 19 Jun 2009 13:09:53 +0000

FCPA control measures for an adequate system of internal accounting controls include maintaining appropriate segregation of duties, allowing only authorized transaction execution, controlling access to assets, and reconciling documented assets to actual assets regularly. Completeness, accuracy, authorization, and accessibility are considered key internal accounting information protection controls that fulfill FCPA legal requirements. These control measures most often interact with — or are deployed through — IT financial applications, thus justifying information security management’s involvement in assessing compliance with the FCPA.

To dispatch FCPA information reliability requirements, an information security manager should identify, understand, test, and document internal accounting security controls for information assets. Essentially, an information security manager should assume responsibility for assessing financial applications for FCPA safeguarding compliance. Technically, application safeguarding controls should be present during input, processing, and output. IT procedures are expected to provide information protection throughout the life cycle of earmarked FCPA financial application systems. Key internal accounting controls can be mapped to information security confidentiality, integrity, and availability control measures. For instance, information security application accuracy controls include input edit and validation routines that ensure information integrity.

“View Part I of the Application Protection series here“

Application Protection – Part II

Robert Davis — Tue, 16 Jun 2009 19:06:50 +0000

The FCPA codifies bribery of foreign officials as a criminal offense for U.S. publicly held companies, requires accurate financial-transactions accounting, and amends the Securities Exchange Act of 1934. With regard to accounting, FCPA Section 78m (b) (2) documents managerial responsibility for generating and retaining financial information while presenting transactions accurately and fairly, as well as deploying a “system of internal accounting controls.” Furthermore, FCPA Section 78m (b) (5) has been interpreted as requiring U.S. businesses to create and sustain adequate internal accounting controls regardless of an organization’s cost-benefit analysis ratio. This section of the FCPA therefore decrees preventive and detective controls to avoid financial statement fraud or misrepresentation.

“View Part I of the Application Protection series here“

Application Protection – Part I

Robert Davis — Fri, 12 Jun 2009 18:36:47 +0000

Legacy law or regulation replacement is a common occurrence within most governments when circumstances appear to discredit legal mandate enforcement. However, the U.S. Sarbanes-Oxley Act (SOX) of 2002 does not supersede the U.S. Foreign Corrupt Practices Act (FCPA) of 1977. In fact, though tagged legacy enterprise governance legislation by some officials, the FCPA has thrived as the basis for enactment of various internationally recognized legal edicts addressing internal accounting controls that indirectly impact information security management requirements.

Contextually, the FCPA applies to U.S. publicly held companies and was adopted in the 1990s by the Organization of American States (OAS), the Organisation for Economic Co-operation and Development (OECD), and the Council of Europe (COE). Concerning international relevance, the FCPA is a frame of reference for most current IT financial application security best practices. Specifically, details demonstrating this law’s influence are well documented in IT financial application assurance and internal accounting control literature.