Toronto software firm aims to corner compliance niche

A Toronto-based software company says it can offer piece of mind to public companies and investors still rattled by the Enron and WorldCom scandals.

Felicia Salomon, president and CEO of CRSTL Systems, said her company’s compliance

software will make public companies more transparent, revive shareholder confidence and bolster shareholder value for the companies that adopt it.

“”Ordinary investors have to be confident that the company they’re investing in has the right processes in place to protect their investment,”” said Salomon, a former chief compliance officer with a major insurance firm. “”They need to know the company is doing whatever they can to ensure that the shareholders are protected . . . and the board of directors is taking that responsibility to heart.””

Salomon says CRSTL’s Compliance Positioning Software (CPS) provides assurance to both companies and shareholders that all corporate governance regulations are being followed. CPS covers such complex rules and requirments of the financial marketplace as the Sarbanes-Oxley Act, the New York Stock Exchange, the NASDAQ and the Toronto Stock Exchange.

This “”facilitates the culture of compliance within the organization, generating reports that outline specifically where the company is in compliance or where there is a gap,”” said Salomon. “”In that respect, it can provide the structure needed within an organization to ensure the transparency is there.””

The software, which is built on Java, is already loaded with a legal database and can be tailored to fit the legislative needs of sectors such as telecommunications. The database can be updated on a consistent basis so it’s always in tune with current legislation, said Salomon.

CRSTL is working on a money-laundering and Patriot Act module for the U.S. “”And we’re having talks with a major telecommunications company in terms of building something for the CRTC (Canadian Radio-television and Telecommunications Commission) compliance requirements. We’re also talking to a major accounting firm about building the financial component and internal controls on the CRSTL framework,”” said Salomon.

David Paterson, national director of public affairs for the Canadian Advanced Technology Alliance (CATA), says such software is especially useful when applied to Canadian income tax rules because they are expanding exponentially.

“”You can always be sure that legislation will become more and more complex,”” Paterson said. “”Nobody ever seems to abolish old rules, they just addd new ones on top, which makes life endlessly more complicated. So this would be a very useful tool to have.””

But Catherine Hajnal, professor of information systems at Carleton University’s Sprott School of Business, cautioned that while such software can help a company remain compliant, “”you have to understand what its limitations are. There’s nothing that doesn’t guarantee an Enron won’t happen again. There’s no technology fix for that.””

Hajnal added that a company cannot be solely reliant on software when ensuring it is completely up to date on compliance. Procedures and policies that are inherent in the organization are ultimately what makes it compliant, she said. “”Legislative changes often require more attention than an automatic update.””

Some studies suggest a direct corelation between compliance and shareholder value, yet Hajnal had her doubts. “”It’s not a competitive advantage because everyone is supposed to be doing it.

Hajnal added purchasing decisions for compliance software should depend on how often the relevant legislation changes. “”If it’s not as frequent, then the software wouldn’t be as valuable to you.””


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Jim Love, Chief Content Officer, IT World Canada

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