Q&A: Approva's Philip Livingston on Sarbanes-Oxley

Computerworld - By any measure, Philip Livingston has led a storied life. After graduating from the University of Maryland in 1979, he became a backup offensive tackle for the Oakland Raiders, where he was a member of the Super Bowl XV championship team in 1981.

After his career with the Raiders ended that year, Livingston received an MBA from the University of California, Berkeley, and embarked on what has been a 20-plus-year career in finance. In 1993, he helped take Boulder, Colo.-based Celestial Seasonings public. In 1999, he became president and CEO of Financial Executives International in Florham Park, N.J. There, he helped craft two sections of the Sarbanes-Oxley Act of 2002 and was on hand when President Bush signed the legislation into law.

After two years as chief financial officer at World Wrestling Entertainment Inc., Livingston was named last month as vice chairman of Approva Corp., a Vienna, Va.-based maker of enterprise controls management software. Livingston spoke today with Computerworld's Thomas Hoffman about his work at Approva and his expectations for corporations' ongoing Sarbanes-Oxley compliance efforts.

What's your charter at Approva? It's really to help them build the business. The company is only three and a half years old. Given my background as a CFO, I became familiar with the company and I introduced some other CFOs and controllers to the product. They've been supporters and happy customers since, and it has kind of snowballed from there.

Do you have a sense as to whether a significant number of early filers (to meet Sarbanes-Oxley Section 404 requirements) are reporting material weaknesses with their IT controls? I do think there's going to be a significant number. I think it's going to be focused on smaller companies.

Philip Livingston of Approva Corp.

An incredible amount of work ended up going into the IT area for Section 404. It seems that in the IT area, the accounting firms didn't just come in and ask what key controls could feed the accounting statements. ... They came in and said, "These are the best practices in IT and if you're not adhering to these best practices, you could have serious deficiencies that could lead to a material weakness." I think it was classic overkill in the IT area. I don't think the auditors grasped this.

Once early filers get past the initial Section 404 hurdles, what do you see as their next set of challenges? Meeting Section 409's requirement that they report any material changes to their financial condition in a timely manner? That's been around in practice for a while; I don't see that as a big challenge. The biggest challenge is how to turn 404 into an ongoing benefit for the company. It's about a continuous improvement of controls.

That's why Approva's in a hot spot right now.