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Press ReleaseSarbanes-Oxley Act Prompts Hotlines For Firms Not Covered By ActFREDERICKSBURG, VA, June 9, 2003 -- A significant number of privately-held firms are voluntarily setting up "Sarbanes-Oxley hotlines," even though they are not required to by the legislation.The Sarbanes-Oxley Act sets forth a requirement for publicly-traded companies to establish a system for employees to report to boards of directors suspected accounting or auditing misdeeds. For most companies, this translates into an outsourced employee hotline. This comes as no surprise to National Hotline Services, Inc. (NHS) President, Richard P. Kusserow, who predicted a rapid expansion of hotline business shortly after passage of the legislation last summer. According to Kusserow, "There will be a large increase in the number of employee hotlines as companies see the need to expand employee feedback loops in that way." NHS has benefited greatly from passage of the Sarbanes-Oxley Act. Thirty-five percent of all new hotline clients signed up by NHS since January 1 have wanted Sarbanes-Oxley hotlines. During that period, NHS' total number of clients served increased almost 30%. Although the Act applies only to publicly-traded companies, NHS says 15% of its new clients desiring Sarbanes-Oxley hotlines are not required to comply with the Act since they are privately-owned companies or not-for-profit entities. "It is becoming increasingly clear that board members from all sectors, profit and non-profit alike, look at the Sarbanes-Oxley Act requirements as the new best practice," said Larry J. Tomayko, NHS Chief Operating Officer. The Sarbanes-Oxley Act was passed in response to corporate scandals, such as those involving Enron and WorldCom, where financial and senior management were permitted to control the flow of information to their companies' boards. Sarbanes-Oxley has placed heavy responsibilities on the audit committees of boards of directors to provide proper oversight of financial management. Section 301 of the Act requires audit committees of publicly-held companies to establish procedures for employees to report confidentially and/or anonymously problems and concerns regarding questionable accounting, internal accounting controls, or auditing matters directly to a designee of the board. This whistleblower provision was included to ensure that information from employees could flow to the board unimpeded by management. National Hotline Services, Inc. has been providing specialized hotline services since 1992. NHS uses highly-trained specialists to set up and staff employee hotlines. For more information, see http://www.hotlines.com. Contact: Carrie E. Kusserow, Director of Media Relations (703) 535-1404 ckusserow@hotlines.com |
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