ALTHOUGH THERE HAS BEEN a lot of buzz about the Sarbanes-Oxley act over the last couple of years, in reality, many meeting planners are finding the act to be nothing more than a minor disruption.
“It's a big, scary word attached to a lot of common sense and a lot of mumbo jumbo that takes a lawyer to interpret,” says Cheryl Geib, national travel and meetings manager at Chicago-based accounting firm Grant Thornton, which counsels companies on how to comply with the act.
Sarbanes-Oxley was enacted in 2002 to increase corporate accountability of public companies. For planners, the major requirement of SOX is to track and document all areas of spend. But compliance is not as convoluted as it sounds, says Geib. “The processes that you have in place in order to be SOX compliant must create a circle,” she says, with checks and balances documented at every point along the way. So, if an auditor questions an expense, documentation must confirm its validity. “That means providing documentation of an invoice against a check, a check against the person who approved it, approval against the contract that was signed to generate that event. That's the circle — contract, invoice, check, approver.”
Geib says it should not be a major headache because most companies already have the systems in place. However, one change Sarbanes-Oxley has created for Geib involves billing procedures. “We are demanding that hotels get us our master bills as we leave or within seven days of the event,” she says. “We have to pay our bills within the month that the product was consumed.” To do that, Grant Thornton has stopped using credit cards to pay meeting bills, particularly for big-ticket items, because payments made by credit card are posted the next month.
Michele Snock, manager, global meeting services, Cisco Systems, San Jose, agrees that SOX has not been as much of a hassle as people initially thought it would be. “One of the things that Sarbanes-Oxley wants to ensure is that there are approvals in place for anything a company does,” she says. “We already had the approval processes in place.” However, Cisco did add a level of checks to its reporting structure. Previously, senior managers from the department making a meeting request had to sign off on expenses. Now, those managers also need to get a sign-off from a financial analyst within their division.
Snock uses a software program to track, document, and get approvals for all meeting expenses, which was recently updated to bring the financial analyst into the loop. However, planners who do not have such systems have complained of an increase in paperwork from SOX compliance. Susanne Gurman, marketing programs manager at Open Pages, a Waltham, Mass. — based company that provides SOX compliance management software, says companies without automated processes have seen paperwork increase up to 80 percent as they track the money trail. Gurman, who has spoken on the subject at industry events, has heard from planners who say documentation now takes up as much as 20 percent of their time.
There are still some gray areas that meeting need to be aware of — and perhaps the biggest is familiarization trips. SOX places restrictions on a company giving free trips to individuals at a company from which it derives more than 50 percent of its revenue.
Geib still has no problem attending fam trips. “It's the only way in this industry for a planner to understand and know the product they're buying.”
Whether it's a fam trip or an incentive trip, auditors will not question events that are documented, approved, and have a business purpose. Where they will cast a more critical eye is on free trips from vendors that have nothing to do with business.
Regardless of whether you plan meetings for public or private companies, Snock believes compliance with the rules of Sarbanes-Oxley just makes good sense. “It's something we should all be doing, anyway.”