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Compliance: What Next?
Sarbanes-Oxley regulations caused companies of all sizes to complain of the onerous amount of additional work required to be compliant.
The complaints rang loud and eventually caused the SEC to scale back on the ruling, especially for small and mid-sized companies.
After the last ten days of financial news, expect the atmosphere around regulations to begin perculating again. John Brace, vice President of the Gartner IT Mangement Group, said “The shadow of yesterday [Monday] will be longer than Enron, Sarbanes-Oxley, HIPAA, or any other regulation of modern time.”
“If the technology exists to tell you the price of frozen pork bellies in Chicago at any given time, why don’t major banks know if they are basically insolvent? It takes 13 months to find out that information? I see new [compliance] regulations coming forward utilizing that type of information,” said Bace. “Most new rules are coming around governance and transparency.”
Bace cited two of the biggest challenges to compliance as cost and culture. Software solutions around compliance are expensive and today’s software is often complicated and difficult to use. And in the area of culture, it’s hard to get many groups across the company to cooperate with the goals of a sound compliance and governance policy. Lawyers, accountants, scientists and engineers all need to be involved in some way, and many of those groups view the new requirements as additional bureacracy.
There is sure to be a public groundswell around the events of the credit crisis. It will be interesting to see how Congress reacts and what new legislation they will enact.
