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September 23, 2004 12:00 AM

Reports from the Sarbanes-Oxley Front Lines

SQL Server Pro
InstantDoc ID #44005

In "Sarbanes-Oxley: Accountants Setting IT Policy" ( http://www.windowsitpro.com/article/articleid/43825/43825.html ), I talked about how the U.S. Public Company Accounting Reform and Investor Protection Act of 2002, aka the Sarbanes-Oxley Act, might affect SQL Server DBAs and developers. Sarbanes-Oxley is a sweeping set of new laws passed in the wake of Enron, WorldCom, and other accounting scandals that have roiled financial markets in recent years. In principle, the law is primarily targeted at publicly traded companies and is designed to make corporate accounting procedures more transparent to investors. In my original article, I said, "That's a noble goal. However, I start to worry when the bean counters end up with an authoritative and final decision on who can have access to an administrator password." I received some interesting responses to that first commentary. Here's what one reader had to say:

"Our auditors appear to be on the extreme side. Effective September 20, DBAs aren't allowed to hold administration rights in production because we're also considered developers. If a DBA needs access to the production environment, they have to wait for the Help desk to generate a work order, then request the ID from the network administrators (hopefully they're not busy at 2 a.m. when a job fails). And then there's all the logging we have to do now. At this point, we have over 20 logs that must be checked and acknowledged daily; by month end, it's likely to exceed 50. The joke around here is that we are going to have to start a new department with the sole purpose of reviewing the logs each day. The 'separation of duties' isn't a bad thing if you're fortunate to have a large IT department. But with seven people supporting offices in six states, there aren't enough heads for all the new hats."

The Sarbanes-Oxley auditors for this reader's firm have decided that they simply won't let production DBAs have the sa password. I wish this was a crazy, silly, extreme example, but I suspect that Dilbertian episodes like this one will become more common as more companies begin comprehensive Sarbanes-Oxley compliance activities. Another reader shared this scenario:

"We were just wrung through the Sarbanes-Oxley wringer here. And in my opinion, the effort was a total waste of time. The auditors didn't know what they were supposed to do, and they missed a lot of things that would have benefited from a closer audit scrutiny. Important concerns were either given a cursory look or totally ignored, while auditors focused on 'important' financial bottom-line stuff like "How often do you change passwords?" and "Where do you store your backup drives?" Those are certainly valid IT audit concerns, but I kept asking them "How does this affect our corporate financial statements?" It seems to me that auditors with lots of axes to grind went way overboard in using Sarbanes-Oxley as a big stick to get their way on certain things."

I raised this red flag weeks ago in my original article. Ensuring data security is a great idea. However, it's unrealistic to think that the accounting auditors will know what the important data security and privacy concerns are. I suspect that this type of heavy-handed approach will lead to situations in which the trained IT staff won't bother to point out potential issues to auditors for fear that the auditors will demand even more stringent changes that make the IT staff's jobs harder. Maybe I'm making a mountain out of a few molehills, but I suspect that episodes such as these will become the norm rather than the exception for DBAs working at companies governed by Sarbanes-Oxley.



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Comments
  • BRENT
    8 years ago
    Sep 29, 2004

    As a CPA and a DBA (no, they are not inherently mutually exclusive) perhaps I can offer a few perspectives.

    1. Like any new legislation, the Sarbanes-Oxley Act has not been completely defined in real terms. Until the SEC drags a few companies into court we will not really understand the true meaning of the law. We understand the intent, but like our tax laws it’s the enforcement that will define our actual compliance on a daily basis. My prediction is that once we get past the first year we will see more meaningful direction on the IT SOX issues. Think Y2K initiatives here.
    2. The accounting firms have not audited for SOX compliance before. They have no idea what the SEC will really go after and, of course, you can never go wrong with more billable hours. Like most people they don’t want to get sued so they will try to tie up every loose end. Again, think Y2K.
    3. The IT community needs to address these issues from a data security perspective. We need to provide alternatives, compensating controls in accounting lingo, which address the issues and can provide the security needed. Fortunately, the accounting firms have a lot more qualified IT staff who understand both accounting and IT issues than they have had in the recent past.

    I work for a great company who, I my opinion, already had plenty of controls in place. With just two dba’s we can’t afford to have one in development and the other in administration. Our compensating control is to list and document the significant changes, a good idea in any environment, have one dba make the modification and have the other dba review, signoff, and roll out the modifications. We will see if this flies with the auditors; we will probably find out next year.

  • BRENT
    8 years ago
    Sep 29, 2004

    As a CPA and a DBA (no, they are not inherently mutually exclusive) perhaps I can offer a few perspectives.

    1. Like any new legislation, the Sarbanes-Oxley Act has not been completely defined in real terms. Until the SEC drags a few companies into court we will not really understand the true meaning of the law. We understand the intent, but like our tax laws it’s the enforcement that will define our actual compliance on a daily basis. My prediction is that once we get past the first year we will see more meaningful direction on the IT SOX issues. Think Y2K initiatives here.
    2. The accounting firms have not audited for SOX compliance before. They have no idea what the SEC will really go after and, of course, you can never go wrong with more billable hours. Like most people they don’t want to get sued so they will try to tie up every loose end. Again, think Y2K.
    3. The IT community needs to address these issues from a data security perspective. We need to provide alternatives, compensating controls in accounting lingo, which address the issues and can provide the security needed. Fortunately, the accounting firms have a lot more qualified IT staff who understand both accounting and IT issues than they have had in the recent past.

    I work for a great company who, I my opinion, already had plenty of controls in place. With just two dba’s we can’t afford to have one in development and the other in administration. Our compensating control is to list and document the significant changes, a good idea in any environment, have one dba make the modification and have the other dba review, signoff, and roll out the modifications. We will see if this flies with the auditors; we will probably find out next year.

  • cballinger
    8 years ago
    Sep 29, 2004

    Brian,
    One point that seems overlooked is that IT had no part in the Enron, WorldCom, et. al. fiasco. any more than their associated finance departments did. The ploy was created, executed and completed by executives and CPA's positioned to get around the system. Why didn't the CPA's/Auditors in these companies catch this? Seems more like the SOX act should have been targeted toward this area than handicapping the IT arena. Just another clear case of Senators having no idea what they are doing, creating an act that does nothing to forgo this same scenario in the future, but adds tremendous cost and productivity losses to the entire IT group in almost any size shop. I'd bet our current and ongoing SOX compliance will add 1-2 million each year, when you consider lost productivity, extra paperwork, and head count to track what is going on.
    Chuck

  • KEVIN
    8 years ago
    Sep 27, 2004

    Brian,

    Thanks for your article on "Reports from the Sarbanes-Oxley Front Lines" I work for Blue Rhino, famous for it's 20 lb. propane cylinders that are exchaged at all major retail outlets in the US, Canada, and other locations. I am a single DBA in an IT shop of 12. We have had many of the same struggles that other fast-growth companies have related to going from a small mom and pop shop to a mid-size corporation. Recent estimates have reported that compliance with SOX will cost us over 500,000 dollars!

    I agree with seperation of duties to a certain extent but with a shop of our size, we all have to fill multiple roles. Not only am I the DBA, but I am the company security officer among other duties. I am required to keep backups of our production databases for a year. I am purchasing hard drives almost every week just to keep up with these archives. Come on! Will anyone really every want me to restore a year old DB backup just to see what has changed? SOX has certainly become a big stick that other departments can wield to get what they want faster than following normal request channels. A bank auditor should be able to comment on but not set IT policy.

    Thanks,

    Kevin Warren

  • WILLIAM
    8 years ago
    Sep 24, 2004

    File this under "Not the way to solve the problem."

    Keep in mind that a CPA firm's first goal is to "Maximize billable hours." So, arguably, Arthur Anderson sacrificed itself to pump the bottom line of the "survivors". It would be interesting (and instructive to the "best and brightest" who passed this albatross of a bill) to discover how many employees of Arthur Anderson are now employed in the surviving CPA firms. Also, how many CPA's holding manager and above positions on the Enron account have been sent to prison? I haven't heard of any, have any of you? Until that happens we are in an endless loop of Enron, more billable hours, Enron, MORE billable hours, ENRON, MORE BILLABLE hours, ENRON!!!, MORE BILLABLE HOURS!!!!

    And WE pay for it all with higher prices on goods and services.

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