IT directors liable for compliance

IT directors will increasingly become liable for ensuring systems meet corporate governance rules, experts warn.

This week, a US chief executive became the first to be charged under the Sarbanes-Oxley Act. Richard Scrushy, founder of healthcare company HealthSouth, faces 58 criminal charges, including conspiracy, money-laundering and perjury, relating to billions of dollars worth of fraud.

As technology plays a more central role in compliance, the risks for IT directors will also increase, says Stephen Ashton, director for global IT business management at investment bank Dresdner Kleinwort Wasserstein (DRKW).

'It's jail at the end of the day. That's what scares people about Sarbanes-Oxley,' he said. 'The direct impact relates to the signature of the chief financial officer on the financial statement. But the chief information officer is closely linked to this function in terms of delivering tools.'

Ashton says DRKW allocates as much as 15 per cent of its staff to compliance, as well as using tools from Tideway Systems that automatically map IT its infrastructure.

Al-Harith Sinclair, a partner at law firm Pinsent Masons, says jail sentences are unlikely for IT directors. 'The most likely action would be a firm replacing or removing an IT director not performing their role,' he said.

'But if the Financial Services Authority got involved, it could disqualify the director from being an "approved person", effectively preventing them from performing that function.'

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