THE MEDIA GLOBO CORPORATION adopts the strictest standards of compliance with all federal, state and local rules and regulations governing the management and operation of a publicly-held business enterprise. In addition to internal compliance controls, MEDIA GLOBO CORP selects its legal, auditing and banking services from among only the most respected firms and individuals. Although presently not a "reporting company" under the Securities Exchange Act of 1934, MEDIA GLOBO CORP adheres to the rules and provisions of the Sarbanes-Oxley Act of 2002 governing the compliance of principally reporting public companies. MEDIA GLOBO CORP has elected to adopt the regulatory compliance policies and procedures recommended by CFO Research Services and ORACLE in November, 2005. The Company is presently evaluating selection of a public auditing firm to assist in all matters of regulatory compliance.
Excerpt of "A report prepared by CFO Research Services in Collaboration with Oracle Corporation," November, 2005.
About the Report
U.S. companies have had to comply with internatonal trade, federal, and state regulatory requirements for generations. But the combination of new regulations such as the Sarbanes-Oxley Act of 2002 and closer scrutiny from investors and boards of directors have made complying with regulation a more costly, higher profile activity for companies -- and one that poses substantial downside risk to companies and to their senior executives. Advances in information technology and the interdependencies among companies have made computerized information about business activities a primary source for demonstrating compliance with government regulation. As a result, regulatory compliance is an increasingly visible, data-intensive, and costly management function that requires collaboration among business units, IT, and finance functions. Now, as most companies have passed through the first few years of Sarbanes-Oxley compliance, senior managers are taking a closer look at their broad compliance activities, asking questions like, who within this organization should lead compliance efforts? Is this company well positioned to meet not just Sarbanes-Oxley requirements, but also the broad combination of other regimens that we face? What is the optimal technology strategy for gathering and analyzing information for compliance? With these questions in mind, we sought in this study to explore how finance executives view their role in regulatory compliance, to gauge their overall satisfaction with their compliance capabilities, and to examine their investment priorities for compliance-related activities. To do so, we executed an electronic survey to readers of CFO magazine in October 2005 and gathered 185 responses from senior finance executives, the majoity of whom work for US. companies with annual revenue of more than $ 500 million. Nearly all respondents had senior finance titles such as CFO, vice president or director of finance, or controller. Respondents cam from a broad cross-section of industries in the U.S. economy, with industrial manuacturing, financial services, high technology, and health care companies particularly well represented. One-third of respondents say their companies have a standardized ERP solution from a single vendor. The other two-thirds of respondents report a combination of hetrogeneous ERP platforms or none at all. Among the top-line findings of this research are the following points: 1) finance executives see their function as playing a leadership role in complying with a broad array of regulations; 2) finance executives call for improving their existing ERP systems and processes that support regulatory compliance efforts, and show less enthusiasm for new classes of technology; 3) although most companies say they have invested appropriately, finance executives say they will continue to invest in process improvement and technology optimization; and 4) companies that have a dopted a single enterprise resource planning application say they are more readily able to comply with regulations and that they derive greater business benefit from their compliance efforts. Conclusion Compliance with regulation -- with Sarbanes Oxley, the Patriot Act, and countless other requirements and standards -- increasingly calls on companies to demonstrate and document how their business operations adhere to specified requirements. In a bid to contain cost, minimize risk, and exploit its unique organizational position and point of view, the senior finance team is emerging as the leader of compliance initiatives at many companies. Through a survey among senior finance executives, this study finds a trend toward further optimization of business processes and existing ERP systems, and little enthusiasm for new technology, complex systems, and costly third-party consultants. Executives at companies that have invested in a consolidated ERP platform from a single vendor say they are more satisfied with their technology and the compliance-related information it provides. This segment of companies also realizes greater benefit from compliance activities and sees the cost of compliance less negatively.
MEDIA GLOBO CORP has elected to assess the ORACLE ERP ("enterprise resource planning" ) platform for compliance management and control.
The Sarbanes-Oxley Act of 2002 (Pub. L. No. 107-204, 116 Stat. 745) , also known as the Public Company Accounting Reform and Investor Protection Act of 2002 and commonly called SOX or Sarbox; is a United States federal law signed into law on July 30, 2002 in response to a number of major corporate and accounting scandals, including those affecting Enron, Tyco International, Peregrine Systems, and WorldCom. These scandals resulted in a decline of public trust in accounting and reporting practices. Named after sponsors Senator Paul Sarbanes ( D-MD ) and Representative Michael G. Oxley ( R-OH ), the Act was approved by the House by a vote of 423-3 and by the Senate 99-0. President George W. Bush signed it into law, stating it included "the most far-reaching reforms of American business practices since the time of Franklin D. Roosevelt."
The legislation is wide-ranging and establishes new or enhanced standards for all U.S. public company boards, management, and public accounting firms. The Act contains 11 titles, or sections, ranging from additional Corporate Board responsibilities to criminal penalties, and requires the Securities and Exchange Commission (SEC) to implement rulings on requirements to comply with the new law. Supporters of these reforms believe the legislation was necessary and useful while critics believe it does more economic damage than it prevents. The Act establishes a new quasi-public agency, the Public Company Accounting Oversight Board, or PCAOB, which is charged with overseeing, regulating, inspecting, and disciplining accounting firms in their roles as auditors of public companies. The Act also covers issues such as auditor independence, corporate governance, internal control assessment, and enhanced financial disclosure.
SARBANES-OXLEY ( SOX ) has a number of major provisions contained within its Title(s) I through V. One of the most controversial and contentious aspects of SOX is Section 404, which requires management and the external auditor to report on the adequacy of the company's internal control over financial reporting ( ICFR ). This is the most costly aspect of the legislation for companies to implement, as documenting and testing important financial manual and automated controls requires enoormous effort. Both managemens and the external auditor are responsible for performing their assessment in the context of a top-down risk assessment, which requires management to base both the scope of its assessment and evidence gathered on risk.
Critics of SOX maintain that the cost of complying with SOX 404 impacts smaller companies dis-proportionally and unfairly; as there is a significant fixed cost involved in completing the assessment. For example, during 2004 U.S. companies with revenues exceeding $ 5 Bilion spend .06% of revenue on SOX compliance, while companies with less than $ 100 Million in revenue spend 2.55%. This disparity is a focal point of 2007 SEC and U.S. Senate Action. The PCAOB also intends to issue further guidance to help companies scale their assessment based on company size and complexity during 2007.
MEDIA GLOBO CORP is committed to maintaining full compliance with the rules and provisions, as well as the "spirit of the law" as promulgated under the Sarbanes-Oxley Act of 2002. The Company is presently monitoring the outcome of any legislative amendment to Sarbanes-Oxley in advance of its FY 2007 audit.
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