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Compliance: Has it Been Worth it?
Sarbanes Oxley. It’s eight years since it has been on the books. Small companies have tried their hardest to avoid having to comply with it. Many large companies have questioned whether it was worth it. And foreign companies have stayed away from being listed on the US markets because of it. A new survey tries to answer the question of whether there is really any value in Sarbanes Oxley.
The survey was conducted by Privoti, a risk and business consulting company. The results are in, and the answer seems to be a resounding affirmation that, however painful, Sarbanes Oxley is worth it. In fact 70 percent said that the benefits outweigh the costs. Digging a bit deeper, the survey found that the longer a company had Sarbanes Oxley provisions in place, the higher regard the company had for the controls. Of first year companies putting Sarbanes Oxley in place, only 39 percent thought that the benefits outweigh the cost and pain of implementing it.
It seems that much of the cost of implementing Sarbanes Oxley is on the front end during the initial implementation. Once it’s there, the on-going costs are significantly less. Fourth year costs are less than 50 percent of the cost incurred during the first year of implementation. Part of the reason is that often consultants are brought in the first year to get the system running, but once it’s in place, in-house staff are able to keep it running. Additional efficiencies are still yet to be had too. One statistic that comes out of the survey is that more than 80 percent of companies have automated less than 50 percent of the key controls that they are monitoring.
Bob Hirth of Privoti commented that “what was once a compliance ‘burden’ for many companies, managed in an ad hoc or project manner and at a high cost, has evolved into something broader than its original objective. While not everyone agrees with all of its requirements, respondents in our survey certainly recognize that SOX has triggered benefits including increased efficiency and effectiveness of processes and operations, greater understanding of control design, and operating effectiveness.”
