Individuals and History

Individuals make history. It may seem like a simple point, but it often escapes us in the modern world. When you read The New York Times, it doesn’t seem that any individual can influence anything.

The Bible, of course, teaches the opposite. In its recording of the great sweep of history over the millennia, it doesn’t deal with abstract, impersonal forces that push individuals into the corner of the story. It depicts the lives of individuals almost exclusively. All the great events recorded in the Bible – the great wars, the introduction of feudalism and imperialism, the rise and fall of empires – are only the backdrop. They are not the main story. The main story is the people, the individuals. The main story is of the small pawns. The actors in the drama are more than the drama itself.

Here’s an example. We all know the story of Joseph and his brothers. Sibling rivalry – the psychologists would have a field day. His brothers sell him into slavery in Egypt, but later they come and bow down to him. That’s the story the Bible tells us.

I’ll tell you how The New York Times would report it. “Feudalism Enters the World.” “Egypt Becomes an Empire.” “Great Famine Strikes the Fertile Crescent.” “New Prime Minister of Egypt.” Then they’d have a little biography of Joseph. The new prime minister comes from an unknown family. He was a slave who rose to power, a brilliant interpreter of dreams. Then, “Monotheism: The New Ideology,” “Leader of Egypt Does Not Follow the Egyptian Gods.” And then the brothers come: “New Immigrants Granted the Land of Goshen.” And finally, “Great Foreign Leader Dies and is Brought to Canaan for Burial.” That’s how The Times would write it up.

But the Bible doesn’t tell the story that way. It tells you the story of one person, Joseph, who has a dream. God made a commitment to his great-grandfather that He would send his descendants down into a foreign land where they would be enslaved, and out of that land, they would come forth and become a special people. So this young boy has a dream and raises the ire of his brothers. Then they do something that in retrospect was wrong: they sell him into slavery in Egypt. That’s the story. It starts with one person.

So the Bible doesn’t tell us the stories of empires. It doesn’t tell us stories of economic changes, of feudalism, of differences in government. All of that is ancillary. That’s not history. History is the person. What the person does makes the difference. If the brothers wouldn’t have sold Joseph, he could not have made Egypt so powerful. If Jacob had not sent him to find his brothers, the whole thing wouldn’t have happened. So all of history depends on what? On one person and the little things that happen to him.

That’s the Jewish view of history. What I do makes a difference. If I give charity today, it will make a difference. So the next thing you do can decide the fate of humanity. That gives a sense of importance to life, doesn’t it? Well, that is exactly what the Bible comes to tell us. In the grand sweep of history, people count.

Need of Document Management System (DMS)

Document Management or Enterprise Information Management is perhaps one of the most important of the enterprise solutions that will provide a solution to the various requirements of SOX. Several sections of SOX have a direct bearing on the manner in which the digital documents/records of the enterprise are created, reviewed, approved, stored, retrieved, transferred, and destroyed.

Knowledge Management: Document & Records Management

Estimates have been made calculating that a significantly large proportion (some say, more than 70%) of the documents owned by an enterprise are in digital format and might never be seen in hardcopy.

According to Gartner’s Editor in Chief James Lundy: Records management will become a top 10 issue for many CIOs in the coming year.

In the following, we will discuss the various sections of SOX that a document management solution might help in complying with.

SOX Sections:

Section 302: According to Section 302, the CEO and CFO have to personally certify the financial statements and disclosures made by the company on authenticity and accuracy. This requires a system in place that will make the CEO and the CFO confident that all the disclosures that the company makes are accurate and authentic. This can be done in two ways:

One is to trickle-down the responsibility of the CEO and the CFO to the lower management levels and in response bubble-up the sign-offs from the lower management levels on all documents that are inputs to the company filings.

Second is to design comprehensive business processes that produce the company filings. The business processes will be designed in a very rigorous manner to comply with all the provisions and proper implementation and training of all the personnel related to the business processes will be carried out and tested on a periodic basis. Further, the business processes themselves will be open to stringent internal audits that will be carried out from time to time.

One, or a combination of both these practices will go a long way towards ensuring proper compliance.

For both these options it is clear that a strong enterprise-wide document management system will provide the foundation on which the compliance will actually be carried out. In the first case, the sign-offs can be configured using a workflow module of the document management system. In the second case, the business process itself will be configured in the document management system and all the relevant supporting or input documents too will be part of the DMS and appropriate subordination and linking will be done between the official company filings and all the input documents to it.

As proof of the records supporting the final company financials–as filed or reported–it is important to archive all the emails, excel sheets, instant messages or other communications and documents that were exchanged which led to a final certified filing by the CEO and CFO. This will safeguard the CxO’s claim that all the financial reports are true to their knowledge and due diligence was carried out before certifying the reports.

Section 404: The CEO and CFO need to provide a report assessing and certifying that the “internal controls” have been assessed and are working fine or that there are weaknesses and appropriate action is being taken. Complying with this requirement is one of the most difficult parts of SOX and requires a whole slew of people, processes and technologies. However, DMS has an important role to play in this.

All the emails and attached documents in the chronological sequence will need to be archived for the purpose of proving that the internal controls are appropriate. Ideally, a workflow module will provide added assurance that the internal controls are implemented.

Section 103: requires storing the documents for a period of 7 years for audit companies. The company being audited would naturally want to replicate the documentation to guard against any discrepancy or miscommunication or mismanagement. Also another part of the act requires

Section 409: requires near-real-time reporting of all material events–whether internal or external to the investors and the regulatory bodies. This can be accomplished by using a single enterprise-wide document management system with appropriate “alerts” and notifications and workflow configured according to the design of the compliance-based business processes. This system would make sure that all relevant information is immediately relayed to the top management (CEO and CFO) and the compliance committee and advisors with minimum delays and latency. DMS provides appropriate capabilities to the compliance advisors to provide a recommendation (within the stipulated time frame) linked to each alert and escalate the reports to the CxOs with the appropriate recommendations. The CxOs can then decide whether it merits disclosure under the compliance act based on recommendations of their Compliance Committee or Advisors.

Section 802: provides for criminal penlties for knowingly altering, destroying, concealing and other activities, such as introducing false records, related to impeding or influencing an ongoing or potentially upcoming investigation by a federal agency. This would call for holding all documents in a secure system where absolutely no one in the company can alter them once they are finalized. Also this calls for a formal document retention and destruction policy which is strictly adhered to (in fact, can be proven to be adhered to) and which involves making sure that no document which any investigating agency would require is being destroyed or deleted. Furhter, the act requires that as soon as the company comes to know about a potential investigation all documents pertaining or somehow germane to that investigation are immediately ordered indestructible to or unalterable by anyone–including the CxOs of the company. This makes it important to have a feature related to creat!

ing and accepting “alerts” from the legal department of the company about any ongoing or upcoming potential investigations and as a consequence immediate information “vaulting” of all related documents. This feature will ensure compliance with this particular section and save a potential prison term and a large monetary fine and of course loss of credibility.

This section has a strong bearing on a records or document management policy of a company. The company should develop a proper document management policy and adhere to it in a timely and rigorous manner. If this is not done, the company is exposed to severe costs and damage in terms of providing documents to hostile parties in “pre-trial discovery”–the legal process of providing all relevant documents to the opposing party in a legal suit. It also exposes the company to accusations of hiding or destroying relevant documents–if done at a later stage–even before any legal proceedings are begun against the company–a la Arthur Andersen’s Enron-related documents.

Document Management systems provide several benefits to the company. Since an IT system is a business process frozen in a particular software and hardware implementation, it proves that the particular business process is being consciously and diligently adhered to. In the worst case, this proves that the compliance is being followed in spirit. Now whether the compliance is being followed in form can be found out from the results of the particular system and also from the audits of it at various stages of the business process. The capability to follow an audit trail on all documents created or processed through it is extremely useful in executing compliance activities and also in proving compliance at a later stage. The capability to create workflows automatically creates auditable process paths.

The DMS also makes possible to access any documents at any point of time with relative ease. It also acts as a centralized repository of documents (both structured and unstructured). All publicly disclosed documents can be locked in the final form as images and can not be tampered with later on. These can be stored and deleted according to the schedules of various regulatory and compliance Acts of the Government. Document and information which is supposed to be for limited consumption at the top management level can also be strictly screened and internal controls on these can be enforced rigorously. At the appropriate time the documents can be “published”.

Whistleblower: For this section of the act, it is important that a document management system is provided to log all whistleblower communication–absolutely securely where no unauthorized personnel may be able to access it–and store all communications.

An indirect requirement for Document Management Systems in the enterprise is for the purpose of storing the documents related to enterprise compliance policies, their updates, amendments, the internal control policies of the company and other documents of a similar nature that help in proving the compliance process at the enterprise.

The company needs to make policies about the following aspects of documents:

  • Creation
  • Approvals
  • Publishing
  • Retention
  • Access
  • Distribution
  • Lifecycle

This policy will help in implementing the contradictory requirements of document retention for compliance purposes and document deletion for reducing the cost of document retention and improving operational efficiency.

Initial step is to define the document retention policy. The second step is to survey the existing document management systems in place in the enterprise and the third step is to create a proper document management system.

Have a centralized repository of documents.

Have a structured and hierarchical architecture

Have security & access control

*A Report Distribution System or Document Management & Workflow System will disburse this to the CEO and the CFO within the prescribed time-frame and allow them enough time to make their own final judgments about the situation.

Finally, a Public Information Distribution System should exist to quickly disburse this information–if judged important by the CEO & the CFO–to the investors & other stakeholders or relevant authorities prescribed by SOX.

Author: Dr. Vikas V. Gupta.

Email: [email protected]