|  | | 2005 News and Press Releases | | |
HEADLINE NEWS:
The Gain And Pain Of Sarbanes-Oxley
Colleen Cunningham
Forbes.com. December 30, 2005
_________________________________________________________________________
EXCERPT: Here's what we know about Sarbanes-Oxley: It is one of the most significant changes to federal securities laws in history; it has been difficult and expensive to implement for publicly traded U.S. companies; and it is here to stay. Despite its drawbacks and costs, Sarbanes-Oxley has helped boost shareholder confidence, and it may even boost shareholder value by helping companies operate more efficiently going forward. Enacted after the Enron and WorldCom financial scandals, the Sarbanes-Oxley Act of 2002 was designed to protect shareholders and the public from accounting errors and fraudulent practices. Administered by the U.S. Securities and Exchange Commission (SEC), SOX sets deadlines for compliance and publishes rules on requirements, covering a wide range of rules. The consequences for failing to comply with certain provisions range from fines to imprisonment. As consequential as SOX is, it is one section of the law that really got the attention of the executive suite. Section 404 of the act requires both the management of publicly held companies and their outside auditor firms to report on the effectiveness of the company's internal controls. Another requirement, Section 302, mandates that executives be personally responsible for financial reports, requiring their signature on the documents. The overall increase in financial scrutiny, coupled with this new, up-close and personal tie between executive and the corporate information being disseminated by corporations--and the costs associated with it--has sparked an ongoing debate in boardrooms across the country. Earlier this year, Financial Executives International (FEI), surveyed 217 public companies and found that it took an average of 26,000 additional staff hours and about $4.3 million to fully comply with Section 404. The SEC originally estimated the tab to be $91,000 per company. Fortunately, the initially onerous financial burdens of Section 404 are now dropping. According to a recent survey conducted by the Big Four accounting firms, large public companies--over $700 million in revenue--will see their Section 404 compliance costs drop by approximately 42% in 2006; most of it related to costs incurred in the initial year for documenting internal controls. |
|
|
