Negotiating in a Sarbanes-Oxley World
Richard Pennington, J.D., C.P.M.
Richard Pennington, J.D., C.P.M., Of Counsel/Independent Contractor, McKenna Long & Aldridge LLP, firstname.lastname@example.org
91st Annual International Conference Proceedings - 2006 - Minneapolis, MN
This paper provides a background on the Sarbanes-Oxley Act (SOX) and its impact on negotiations by supply management professionals. SOX does not dictate contract negotiation outcomes, but a basic understanding of SOX is important for planning negotiations and anticipating possible SOX issues. The essential steps of negotiation – planning, understanding the issues and needs of the other side, assembling the appropriate teams, formulating communication strategies and options – are implicated in new ways in the world of Sarbanes-Oxley. Even for nonprofit and governmental organizations not technically covered by the statute, SOX has resurrected visibility of internal controls in organizations. Organizations’ interests that must be accommodated include integrity in financial reporting and a process for evaluating risk in transactions. The use of service organizations, those outsourced arrangements directly touching financial reporting in a material way, adds substantive issues to any complex negotiation.