NJ Governor’s Award for Performance Excellence to be Presented at QNJ Annual Conference

By Tom Ligas, Executive Director QNJ

The Governor’s Award for Performance Excellence will be presented to three organizations at Quality New Jersey’s 17th Annual Conference on May 16, 2006 by either Governor Jon Corzine or Gary Rose, Head of the Governor’s Office of Economic Growth and Chair of the Governor’s Economic Council. This award, which uses the Malcolm Baldrige National Quality Award criteria, recognizes organizations that have demonstrated successful results through the deployment of a comprehensive integrated quality framework.

The recipients of the 2005 Governor’s Award for Performance Excellence are Reimbursement Services Inc., Jersey Shore University Medical Center and Virtua Health. All three will receive the Bronze Level Governor’s Award.

Reimbursement Services Inc. is an employee benefits brokerage and consulting firm headquartered in Mt. Laurel with 73 employees and serving small and mid-size companies throughout New Jersey, Eastern Pennsylvania, Northern Delaware and Manhattan, New York.

Jersey Shore University Medical Center in Neptune is a division of Meridian Hospitals Corporation, within Meridian Health. It is a university affiliate of The University of Medicine and Dentistry of New Jersey’s (UMDNJ) Robert Wood Johnson Medical School. JSUMC has about 2,900 employees and provides inpatient care, outpatient care, emergency care and community care.

Virtua Health is a non-profit healthcare delivery system, headquartered in Marlton. It is the result of a 1998 merger between Memorial Health Alliance and West jersey Health System, which have been serving South jersey for more than a century. Virtua Health has hospitals, ambulatory surgical centers, out-patient services, long-term care and sub-acute rehabilitation facilities, and a medically-based fitness center.

Quality New Jersey will also recognize two organizations for taking another step along their Quality journey via Baldrige-based assessments – Raritan Valley Community College and Cablevision NJ Field Operations.

At the conference, the First Annual Best Practices in Business Award will be presented to RCI Vacation Network Group for their “Topgrading: Building Capabilities for Execution” initiative addressing employee talent management. This award was selected from the First Annual Best Practices in Business Conference held February 2, 2006. NJBIZ publisher Chad Beatty welcomed sixty people from a variety of organizations and functions to hear ten presentations designed to share best practices from the business community. The Second Annual Best Practices in Business Conference will be held in February 2007.

A re-presentation of the Second Annual Innovation in State Government Award will also occur at QNJ’s Annual Conference. On May 1, 2006 QNJ and the NJ State Department of Personnel will co-presented this Award to the Department of Transportation for their “Best Management Practices in Transportation Security – Partnership Between the Public and Private Sectors” initiative. Special Merit Innovation Awards will also be presented to the NJ Housing & Mortgage Finance Agency for their “NJ Housing Resource Center” initiative and to the NJ Lottery for their “Harnessing The Power Of Cultural Differences For Successful Multi-Cultural Collaboration” initiative.

These awards were selected from the Fourth Annual Best Practices in State Government Workshop held October 19, 2005. State Treasurer John McCormac welcomed 90 attendees from various state government departments. The conference, designed to share best practices among state agencies, to recognize the good work being done in government and to allow for networking opportunities, featured 14 presentations selected from a record 37 submissions. Attendees gave the workshop high marks. “I was happy to say I worked for the State of New Jersey after this conference” said a DOT employee. A Labor & Workforce Development employee remarked “I can say this was the best conference I ever attended”.

In October 2006, the Fifth Annual Best Practices in Government Workshop will be open to all government organizations in NJ, including local and federal.

QNJ, a private not-for profit organization, administers the Governor’s Award for Performance Excellence and advises organizations of all sizes and in all segments, including business, education, healthcare, government and non-profit, on improving their performance. By participating in QNJ, organizations can share best practices, benchmark other organizations, and receive Baldrige training and discounted consulting services. In addition to identifying improvement opportunities, the Governor’s Award process and two other Baldrige-based assessments provide valuable consulting advice for a fraction of what it would cost to obtain it elsewhere. For more information on QNJ, please visit www.qnj.org.

Sarbanes-Oxley and Quality Control

Photo: W. J. Latzko, Ph.D.
W. J. Latzko, Ph.D.

The purpose of the act

There is a great deal of interest by the quality community in the Sarbanes-Oxley act of 2002 (H. R. 3763). Senator Paul S. Sarbanes and Congressman Michael G. Oxley, created this act to set rules for CEO’s, CFO’s, their attorneys, and their auditors for the creation of financial reports used by investors (e.g. Annual Reports). What prompted this act was the disclosure of major wrong doings in large corporations and major auditing firms. The purpose of the act is to give investors the truth, the whole truth and nothing but the truth.

The alphabet soup

The act spawned a whole set of acronyms which refer to its implementation and interpretation. One hears of SOX, PCAOB, COSO, COBIT and similar acronyms. We will try to clarify some of these terms and show how they fit in.

The act’s requirements and the PCAOB

SOX refers to the Sarbanes-Oxley act itself. One can find the 66 pages of the act at http://www.law.uc.edu/CCL/SOact/soact.pdf. It is worth reading but be warned that it is not light reading.

Title I, the first real chapter of the act, sets up a non-profit corporation called the Public Company Accounting Oversight Board (PCAOB). It is the function of the PCAOB “to oversee the audit of public …, in order to protect the interests of investors and further the public interest in the preparation of informative, accurate, and independent audit reports for companies the securities of which are sold to, and held by and for, public investors.”

The act requires the PCAOB to set standards and register public accounting firms. Your editor was told that over 1200 firms have applied and that, to-date, over 800 are registered. You see can full details at the PCAOB’s web site http://www.pcaobus.org/index.aspx under “Registration”.

The act uses the words “quality control” 15 times with four additional mentions of the word “quality”. In all cases, this refers to the auditing firm. The use of the word “quality” relates solely to the financial integrity of the audit report issued by the external auditors.

Sections 302 and 404 require that management establish and maintain internal controls. In both cases, these controls are for assuring that the financial reports are accurate and true. Welytok (2006, p. 156) distinguishes the way the term “internal Control” is used in the two sections. She indicates that in Section 302, the act refers to “disclosure controls and procedures. In Section 404 the act refers to “internal control over financial reporting”. Nowhere does the act require quality control of the audited company.

COBIT

Since companies collect most financial data these days on computers, the IT Governing Institute (ITGI) established a standard for information technology (IT). This set of standards they call, “Control Objectives for Information and Related Technology”. This standard results in the acronym COBIT. You can access the standard at http://www.isaca.org/ . The organization developed a subset that specifically addresses the financial aspects required by Sarbanes-Oxley. The organization places the subset standard on its web site at http://www.isaca.org/Content/ContentGroups/Research1/Deliverables/IT_Control_Objectives_for_Sarbanes-Oxley_7july04.pdf

COSO

COSO stands for the Committee of Sponsoring Organizations of the Treadway Commission. “The SEC specifically refers to [COSO] as an acceptable framework for management’s internal control assessment.” (Welytok, 2006, p. 159) Again, the issue is financial reporting not quality control in the sense in which we apply it.

Sarbanes-Oxley and Quality

The Sarbanes-Oxley act has some similarities with ISO 9000. Both are inspection or audit oriented. Both are procedure driven. Both maintain the status quo as far as quality is concerned. In this writer’s opinion, the Sarbanes-Oxley act is valuable for the financial and investing sector. It does not advance quality in its present state. The only group required to look at quality control is the public auditing profession of 800 to 1200 firms. One can read their quality control methods at http://registrationapplications.pcaobus.org/ by going to the bottom of the page and entering the name of an Audit Firm. The PCAOB has set some interim standards for the control of quality of the auditors. One can view these standards at http://www.pcaobus.org/Standards/Interim_Standards/Quality_Control_Standards/index.aspx.

Reference List

Welytok, J. G. (2006). Sarbanes-Oxley for Dummies.