Canadian IT feels SOX spillover

Hockey dominance, better beer, more land mass: just a few of the things that Canadians like to point to when discussing the differences between our country and the still-world-hegemonic power to the south of us.

And while it can be convincingly argued that many aspects of the Great White North do truly differentiate us from the U.S., it nevertheless becomes clear on many occasions just how closely bound we are to the ripples that emanate from below the border. One need look no further than recent U.S. corporate compliance regulations to see just how significantly Canadian firms are affected by what happens to their brethren in the States.

In the wake of major big-business accounting scandals such as those at Enron and WorldCom, a wave of new regulations surrounding business practices swept into the U.S. And for good reason: influential companies were doctoring their books and breezily inflating bottom lines. Such flouting of the law was exemplified in all kinds of industries, including IT; Computer Associates is still trying to distance itself from its recent revenue reporting, ahem, difficulties.

It can be argued that this kind of corruption has always existed to such a large extent, and that the scandal-ridden environment was merely a result of the latest perpetrators letting their guards down and getting caught red-handed. Whatever the cause, the wrongdoers were exposed in a sensational fashion, and the public wanted blood. They got it, not only in the form of convictions against high-profilers like WorldCom’s Bernie Ebbers, but also in the form of stiffer regulations to keep the corporate world honest.

The most notable of these new requirements is the familiar Sarbanes-Oxley Act. Although it is a U.S. invention, its tentacles have not only made life more complex for American IT shops, but also for Canadian ones. On one hand, it has created a new workload for companies based here with operations in the U.S. But its more subtle effect has been a heightening of the regulatory mindset and a microscopic inspection of corporate practices.

On paper, such inspection should create a somewhat less-corrupt business environment. In practice, the process has altered the role of IT departments forever — both U.S. and Canadian ones.

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