Resources

SarbOx Compliance for Publishers

This is a brief primer on how royalty tracking software can facilitate compliance with The Sarbanes Oxley Act. Please note that your firm’s compliance may involve additional considerations; this article is intended to be a starting point for understanding how you can make Sarbanes Oxley compliance easier within your royalty management operations.

For publishers already faced with complex royalty contracts and labyrinthine sub-rights agreements, the requirements of Sarbanes Oxley compliance can present an unwelcome layer of additional complication. However, just as with other technical aspects of royalty accounting and rights management, there are tools to help. As part of an ongoing exploration into finding the best royalty software, and the best rights management solutions, today I will outline several ways to make “Sarbox” compliance easier within your royalties accounting structure.

Sarbox obviously wasn’t targeted specifically at the publishing industry, and thus has many stipulations that are, if not irrelevant, less than critical to publishers. However, all publicly held corporations – publishers included – are subject to the act’s regulations, which set a number of reporting and accountability benchmarks. If you use, or are considering, a dedicated royalties software solution, finding one that automates your Sarbox requirements can save time in day-to-day operations, as well as making any audits that may be required much easier. There are five general function areas to look for, to find the best royalty software solution for your firm.

Segregation of Duties
Approvals
Audit Trail
Read-only Access (to data “owned” by other systems)
Support of Enterprise Security through Active Directory

Segregation of Duties
Separation of Duty (SOD) is a security principle whose primary objective is the prevention of fraud and errors. This objective is achieved by disseminating the tasks and associated privileges for a specific accounting process among multiple users.

At some point in your ERP (enterprise resource planning), an administrator will have to map out whch employees will have responsibility and access for specific areas of the rights and royalties management workflow. Once the general framework for division of duties and responsibilities is created, the amount of time spent on SOD compliance can be minimized by using software that automates the separations.

SOD compliance at its most basic can be simple within a good royalties management software system. However, not all royalty software has the functionality needed. If you are shopping for a royalty software solution for a publicly held publisher, SOD functionality should be on your shortlist for royalty accounting features.

Approvals
Sarbanes Oxley also establishes tighter control over events significant within the royalty accounting process, such as author advances that exceed budget, significant write-offs, extraordinary deferrals, or exceptional financial variances. Complying with Sarbox in with regard to these anomalies typically means having a structure in place so that the appropriate employees are notified when such instances occur, and creating a paper trail to document this notification.

There are many ways to meet these requirements, but the only way to do so efficiently within your royalty accounting workflow is to automate it. Therefore, a good royalty software solution will have provisions for creating an auditable record of approvals. Again, not all royalty software has this functionality built in, though the better systems do.

Audit Trail
Unsurprisingly, an well-defined audit trail is mandated by Sarbox. One way to approach this area is to evaluate how customizable the reporting functions of your royalty software is. A royalty software solution that touts an in depth auditing feature, but doesn’t offer customization of reports, may end up not working for you down the road, as your business changes.

Read-only Access (to data “owned” by other systems)
In many ways, having more data available to more of your employees is good for your company’s overall health. An employee linked into the bigger picture is more motivated than one who has a myopic perspective on the company’s goals, especially when the restrictions are due to something as dryly bureaucratic as Sarbox compliance. In addition, greater data availability gives employees the freedom to compete at 100%, without delays in accessing key company knowledge.

However, many of your royalty accounting documentation can fulfill it’s purpose while being read-only. In fact, you may already have such safeguards in place in your general database. Finding a royalty management solution that supports read-only documents can be critical in maintaining royalty accounting best practices, while also staying competitive.

Support of Enterprise Security through Active Directory
An effective security solution is always a trade-off between security and ease of use. Ease of use usually means less or even no security, while good security can mean no ease of use. A balance is key in royalty accounting software; security is important for obvious reasons, among the reasons ease of use is important are that your royalty accounting software will need to accommodate changes in the publishing industry that are sure to arise.
Active Directory is a Microsoft-created technology which allows administrators to assign policies, deploy software, and apply critical updates to an organization, and stores information and settings in a central database.

Royalty software which has integrated Active Directory to ensure security is making use of a proven enterprise security framework, one which is the industry standard. The best royalty accounting solutions will have complete Active Directory integration.

Again, these are just the basic starting points for ensuring that your Sarbox compliance is painless as possible for your royalties accounting operations.





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MetaComet Systems, Inc., Computer Software Publishers & Developers, South Hadley, MA