BusinessCompany NewsSarbanes-Oxley Act has ‘put us under pressure’

Sarbanes-Oxley Act has 'put us under pressure'

The demands of the Sarbanes-Oxley Act on corporate governance has put 'enormous pressure' on GlaxoSmithKline, prompting it to put in special measures to deal with its requirements.

Link: John Coombe profile

In an exclusive interview with Accountancy Age, Glaxo’s chief financial officer John Coombe said his company had put in a dedicated system of checks and balances to deal directly with the demands of the Act.

He said that, to be able to sign the so-called oath of honesty required by the provisions, he and the chief executive officer have to be satisfied that the figures are financially sound and backed by evidence.

‘In order to have this, we have developed a system of “judgement reports”. Now every quarter, the profit and loss account is broken down into business segments – the US, Europe, and international – but also manufacturing, research and development corporate segments,’ he explained.

The segments are read by executive team leaders, who present a report that states the levels of profits are correct for their business and that they support the figures.

Coombe added that, more importantly, the executive leaders also had to say they had been through the figures with their management team and that, in arriving at the numbers, they had made certain judgements.

‘In the judgement reports, the executive leaders confirm that their share of the group’s profits do represent a true and fair result of their work. And also that, if they have actively had any particular management of financial judgements in arriving from the divisions, they clarify just what those judgements are,’ he said.

According to Coombe, all this added work has had a positive effect on the company, as there is more transparency and everyone knows the figures in the report are valid and backed up.

‘Interestingly, to the FD who is seeing more work done on governance, this is a step forward in encouraging colleagues to be part of the process.’

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