ADP and Deloitte makes easy work of Financial Reporting Law

April 2005: The Sarbanes Oxley Act affects all US public companies, including subsidiaries trading in the UK, and has a knock on effect for those that oursource any business processes where financial transactions are involved, for example Payroll Services.

ADP, world leader in outsourcing services for payroll and human resources administration management, handles payroll transactions worth many millions of pounds a year for its customers. ADP, in partnership with Deloitte Paris, has taken steps to make this new law easy to manage for its clients, and takes away the costs associated with auditing.

Spawned by the various corporate scandals that shook the US, the Sarbanes Oxley Act requires companies that are publicly traded in the US to comply with new rules for accurate, complete and timely financial reporting. Its intent is for companies to comply with certain requirements, and in particular for each company to produce a yearly report on internal controls related to financial reporting.

Companies using an external supplier’s services must add a complementary report for these outsourced services that details the controls carried out, their relevance and their effectiveness. ADP relieves its clients of the task of producing this document by providing them with a report by Deloitte Paris. This firm tests ADP controls in Europe in 9 countries: France, the UK, Germany, Switzerland, Italy, Spain, Ireland and Portugal.

Deloitte examined the controls that ADP conducts internally when providing services for all its clients in two steps:

1. The first step began as early as April 2004 and targeted identifying the controls set up, their relevance and their documentation. When this step was completed, Deloitte published a first report without reserve.

2. The second step lasted six months beginning July 2004. Deloitte carried out on-site tests to evidence that the controls designed in the first step and in each country are effective. With the conclusion of this phase at the end of January 2005, the auditing firm issued a second report without reserve.

This attestation constitutes a report available to all ADP clients that have a presence in Europe and are publicly traded in the US. It saves the time and cost associated with a separate audit. It benefits as well all companies that seek the proof of optimum quality of service.