1. Kenneth Cole Gets Serious About Sarbanes-Oxley Sarbanes-Oxley Group E: TonyMohammadLeo

2. Introduction  SOX  Background  Requirements  Compliance  Kenneth Cole  Background  SOX Implementation  Conclusion  Importance of SOX

3. Basic history of the Sarbanes- Oxley Act  Became a public law in July 2002  The House passed Representative Michael Oxley’s bill in April 2002  Maryland Senator Paul Sarbanes’ bill passed the Senate Banking Committee in June 2002  The House and the Senate formed a Conference Committee to reconcile the differences between both bills and the Sarbanes-Oxley Act of 2002 was enacted  The Sarbanes-Oxley Act was signed into law by President George W. Bush (funny)

4. What does the Sarbanes-Oxley Act require?  SOX requires chief executives and chief financial officers of public companies to certify that their company’s financial statements filed with the Securities Exchange Commission (SEC) are materially accurate and complete, and that in all material respects they present fairly the financial condition and results of operations of the issuer. These certifications subject the signers to potential civil and criminal liability for false certifications.

5. How may companies become SOX compliant?  Have company wide documentation processes  Refresher accounting courses for all key personnel  Audit departments devoted to insuring accurate financial records  Workflow and document control  Divisional heads held accountable for their divisions  Honest executives

6. Kenneth Cole  Background  Established in 1982 in Midtown Manhattan  Operates 94 retail and company stores  Went public in June 1994  $468 million specialty apparel retailer

7. Kenneth Cole   Subject to provisions of the Sarbanes- Oxley Act   Internal audit and finance personnel jointly conduct informational seminars for all managers   Created a third-party company to accept anonymous reports from employees about SOX violations   Identified and documented all processes and controls in all business units

8. SOX Implementations   Excel and other spreadsheet applications posed unacceptable risks to accurate reporting, such as:   incorrect formulas,   data entry and translation errors,   and excessive responsibility placed on individual users.   Solutions:   HandySoft SOXA Accelerator   Business process management platform   Tequila Software Retail Lease   Budgeting and monthly payment processing   Counterpoint Systems Pelican ProFiles   Manage licensing activities and revenue

9. Why the need for SOX?  Sarbanes-Oxley passed in response to a number of major corporate and accounting scandals  Enron  WorldCom  These scandals resulted in a decline of public trust in accounting and reporting practices  Many people lost all of the retirement money, homes, families, and other things of importance  SOX protects shareholders’ investments

10. Basic retailing knowledge for retail CEO & CFO  Understand gross margin  Basic concept of merchandise planning  Beginning of month (BOM) stock  End of month (EOM) stock  Stock-to-Sales Ratio  Income statements  Gross sales  FIFO (first in, first out)  LIFO (last in, first out)

11. SOX Video  Compliance Issues Compliance Issues Compliance Issues

12. Works Cited  Kenenth Cole Article Article  Wikipedia Wikipedia  SEC SEC

13. Questions?