UK companies listed on the US stock exchange have this month been given an extra year to comply with Sarbanes-Oxley (SOX) corporate governance regulations but how many of these companies are considering the importance of the HR department alongside finance and IT in their compliance programme?

According to Larry Cucchi, International Managing Director at Peopleclick, global leader in workforce management technology and services, the human resources (HR) function has an invaluable role to play in achieving Sarbanes-Oxley compliance. Not only does it have a key role as the driver of organisational change and internal communications within a company, it also plays a part in managing associated risks. These could be around HR legal issues and the integrity of personnel data, plus accurate reporting of labour costs, which now have to be assessed and reported.

Cucchi recognises that compliance is already high on the agenda for HR departments. Increasing pressure from regulations such as the Employment Directive and the Race Directive are changing the legal landscape for UK employment and recruitment. Failure to meet these regulations can affect corporate reputation and impose significant fines, and therefore impact financial reporting.

"Any company tackling SOX compliance must consider the role of HR in driving cultural and organisational change and communicating this across the company," adds Cucchi. "In some cases, achieving SOX compliance could include a radical overhaul of business processes, so clear and consistent communication across the organisation is crucial for effective implementation and staff buy-in of the new systems.

"It is also crucial for HR departments to look inwardly at their own systems and processes to ensure the integrity of personnel data. For example, the way payroll is managed and contingent labour costs are tracked will have an impact on financial statements. Also, knowing who has access to sensitive information is important for SOX compliance, so efficient systems and processes are needed to manage the data.

"The role of HR can not be underestimated in striving for SOX compliance and it is crucial that HR works alongside IT departments and management teams for the most effective approach."