Compliance to Sarbanes Oxley is mandatory within Ericsson and is split up into different sections of responsibility. The Project Office as part of Operational delivery is responsible for the following aspects:
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Data gathered for auditing purposes in support of SOX compliance are:
Audit results recorded in support of SOX compliance are reflected in the tables (Table 4.13, Table 4.14, Table 4.15 and Table 4.16) below. Positivistic scoring is utilised in calculations, which are based on the following Likert scale in terms of the level of compliance against the projects audited:
0 = Non-compliance.
1 = Partial compliance.
2 = Full compliance.
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Evaluating results obtained from SOX audits performed on 27 projects in the Nigerian Project Office; performance is noted to be sub-standard in relation to financials (Table 4.13). The numerical values displayed represent the frequency of responses.
Table 4.13 SOX audit results for the Nigerian Project Office − count (Source: Own source, 2011).
In Table 4.14 referring to CC22.214.171.124, as well as CC126.96.36.199, a greater focus is needed in order to improve this area with 41% non-compliance. Though the percentage of full compliance is 44%, it could be argued that the focus should rather be on the higher percentage achieved. However, the crux of SOX compliance is based on risk exposure to the organisation, hence the high percentage of non-compliance projects are of far greater concern, taking into account that the financial risk to the organisation increases exponentially. Archiving of all project documents including financials seems to be performed on a regular basis with a score of 70%; participants are encouraged to continue with this practice while working on slight improvements. As mentioned earlier in this research, it would appear that the Nigerian Project Office is not very mature in the financial realm.
Table 4.14 SOX audit results for the Nigerian Project Office − percentage (Source: Own source, 2011).
Audit results for the South African Project Office are represented in Table 4.15 and 4.16 below. It displays that overall cost and budget control is well managed, with 67% of the 15 projects audited being fully compliant. Planned and actual costs versus the latest cost budget are measured in CC188.8.131.52; 67% full compliance indicates that Project Managers are in the know and effectively manage these financials throughout the project life cycle. A great concern is realised with 60% non-compliance in support of revenue and cost recognition not being aligned with the values indicated in the supporting documents. The customer contract governs all invoicing activities, while Ericsson governs revenue recognition to the organisation. The CFR and the Project Financial Controller take all these factors into careful consideration when they evaluate and sign off on the Project Set-up Checklist and Project Follow-up Checklist. Project Manager not adhering to the content of these financial documents has a direct impact on the organisation’s cash flow. Though both key controls form some of the cornerstones of the organisation, it could be said that non-compliance of CC184.108.40.206 has a far greater impact on the organisation, than non-compliance of CC220.127.116.11. Earned value analysis is thus not possible with a 33% compliance rate; therefore, non-standardisation can be seen in the inconsistency of financial management and reporting in the respective Project Offices.
Similar to the results achieved in the Nigerian Project Office, it is found that the Project Office in South Africa archives their documents in a consistent manner, as prescribed by the organisation. Standardisation is evident in the effective management of this particular SOX key control; however, an improvement in full-compliance is encouraged. Archiving of documents in a secure location does not just suffice as a means to curtail loss of misplaced paper work, it serves as a means to protect intellectual property rights and confidential information. Table 4.15 reflects frequency of responses, while Table 4.16 reflect the same data as a percentage.
Table 4.15 SOX audit results for the South African Project Office − count (Source: Own source, 2011).
Table 4.16 SOX audit results for the South African Project Office − percentage (Source: Own source, 2011).
Table 4.7 is a representation of processes forming part of the audit criteria as a whole. It is significant, as SI Maturity adherence process requirements, as well as measurements, are already covered in part by the PEMA and the PROPS-C positivistic audit results. The essence of maturity as described in the PEMA framework, as well as SI Maturity requirements, support the degree to which tools and processes are used effectively. In continuation, it is then apt to discuss analysis of such data in respect to SI Maturity in each Project Office.
In making use of this comprehensive research strategy, non-standardisation is consistently found when comparing audit results of each Project Office by making use of methodological triangulation. Implementation of processes and adherence to them is also found to be inconsistent, which neither lends itself to achieving operational excellence, nor standardisation of project management processes as part of the key objectives.
Requirements and measurements pertaining to CPM KPI Adherence are described as:
Project Margin is partially covered in the discussion on CC18.104.22.168, however, in addition to the quarterly financial verifications governed by the SOX directive, the Project Offices also require Project Managers to generate weekly Project Financial Analysis Reports. This is accomplished with the support of the Project Financial Controller working closely with the Project Manager in order to run and analyse these reports. The metrics shown in Table 4.17 and Table 4.18 are indicative of the presence of such a report and not its actual content. The content of these financial reports is discussed and corrective actions are taken where needed, however, such detailed financial analysis falls outside the realm of this research. In table 4.5 results of Project Financial Analysis Reports are shown for the Nigerian and South African Project Offices. A total of 27 projects were evaluated in the Nigerian and a total of 14 projects were evaluated in the South African Project Office.
Table 4.17 Project Financial Analysis Reports − count (Source: Own source, 2011).
Table 4.18 Project Financial Analysis Reports − percentage (Source: Own source, 2011).
Referring to Table 4.18, full compliance projects in both Project Offices seem to be fairly equal in the level of application, though the percentages are very low. Less than half of all projects evaluated show evidence of Project Financial Analysis Reports being present. Partial compliance means that a report is present, however, it is either not the correct report or the full suite of reports is not generated from the financial system. Non-compliance as high as 57% in the South African Project Office shows that Project Managers rely solely on the Project Financial Controller to generate reports on their behalf and the Project Managers do not take the initiative themselves. In this regard it is evident that the Nigerian Project Office is more compliant than the South African Project Office. This generates an interesting debate, as results shown earlier in the research present that the South African Project Office is more compliant than the Nigerian Project Office in a measure generated on financial performance. Further analysis is required.
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In an effort to illustrate the variance in application of financial activities within the two Project Offices, the following is discussed. Performing comparative analysis on the financial component within each section discussed yields findings in support of maturity, as well as compliance. The comparative analysis in Table 4.19 reveals a trend or lack of it, as explained below. The Nigerian Project Office is consistent in its scoring pertaining to full compliance measures. This, however, seems to be the only consistent measure that can be learned from these results. Partial and non-compliant scores for both Project Offices, as well as full compliance scores for the South African Project Office, are in great flux and show no consistency at all.
Table 4.19 Comparative analysis of financial maturity and compliance (Source: Own source, 2011).
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