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Sarbanes-Oxley News & Developments
Sticker Shock - Cost of ComplianceCongress did not think of the cost to companies for compliance when they passed the Sarbanes-Oxley Act of 2002.
> > By the end of the year, EMC Corp will have spent more than $1 million and thousands of man-hours complying with two of the main statutes in the Sarbanes-Oxlet Act of 2002 - Section 404, related to internal controls; and Section 302, mandating CEO nad CFO certifications of quarterly financial statements. CFO, Bill Teuber. of EMC can not even speculate the price tag for full compliance.
CFOs across America say they are spending more time and money trying to shoehorn existing practices into legally acceptable formats. Forty-eight percent of companies will spend at least $500,000 on Sarbanes-Oxley compliance, according to a recent survey of finance executives for CFO magazine.
Many finance executives believe that seeking to curb freewheeling ways of Enron, Tyco, and Worldcom, Congress has committed some excess of its own. Part of the problem was the haste in which the law was written. The law has become a windfall for auditors and lawyers and a time drain on overburdened finance departments. The liability implications have put people on edge.
It is hard to know exactly what Congress expected, since it did not assess any costs when it passed the law. The SEC, though, is required to estimate the burdens associated with its information requests under the Paperwork Reduction Act of 1995, and so has offered some guesses at future costs. Some guesstimates have been chronically low. They have typically limited disclosure activities, and do not attempt to quantify costs like software purchases, audit-fee increases, or management and staffing requirements.
Source: CFO
Published:2003-09-02
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