The U.S. Congress passed the Sarbanes-Oxley act in 2002, in response to multiple accounting scandals and collapses of major companies such as Worldcom, Enron and Arthur Anderson. The primary goal of this act is to protect investors by improving the accuracy and reliability of corporate financial information. It has done this by specifying new standards of accountability, needed controls, disclosure requirements and it is enforcing it by new penalties for acts of wrongdoing and non-compliance.
The most significant part of the act, called Section 404, requires a company’s corporate officers to assess whether the company’s financial reporting systems are effectively controlled. The act includes controls over internal financial processes, security, retention of information and auditability. Financial processes that have material impact on the company’s statements have to be especially compliant to these requirements.
Sales Commissions in many companies can account for 5 to 10% of the company’s revenue There have been many instances where a company’s financial numbers have been significantly different from estimates due to mis-management of the sales commission estimation and calculation process. Invariably, this is also one of the areas where a lot of flexibility is required and business managers are allowed to have the flexibility. In most companies sales commission plans are designed at the sales management level and calculated using spreadsheets. The sales commission process typically misses very basic auditability controls.
QCommission is a powerful, flexible sales commission software tool. It calculates sales people’s compensation, accurately, quickly and professionally. QCommission, the sales commission software, offers complete Sarbanes-Oxley compliance in its Premier models. The list of Sarbanes-Oxley requirements as it affects the sales commissions process is enumerated below.