UK firms fail to make software compliance checks under SOX

Businesses leaving job to US parents and running risk of non-compliance

Directors of companies operating in the UK but controlled from the US are ignoring basic checks on software compliance, according to the Federation Against Software Theft (Fast).

The organisation says US companies operating in the UK are jeopardising accurate reporting under the Sarbanes-Oxley (SOX) corporate governance rules.

Many US firms with their general counsel operating at their US head office nominate local UK personnel to take the role of local directors.

However, according to Fast, many of those are surrendering responsibility for intellectual property controls to the US parent with the danger that reporting under SOX misses a significant area of risk.

Under SOX legislation executive officers of UK subsidiaries reporting back to the US have stringent obligations to be personally responsible to their parent for accurate investigations and reporting of material local risk factors.

In June Fast secured a payment of $550,000 against a US-based chemical transportation firm which had under-reported the software licensing needs for its UK subsidiaries. In May Fast also found a US global logistics company was under licensed.

In both cases the companies had surrendered responsibility for software checks to overseas parents.

John Lovelock, director general of Fast, said: ‘Directors of UK companies are increasingly alert to the dangers of IP infringement – particularly their use of unlicensed business software. But it seems that their eyes are shut and ears closed if they are controlled from the US.’

‘You simply cannot square compliance with SOX and an absence of knowledge as to whether your company is properly licensed for its software,' he said.

What do you think? Email us at: [email protected]