Corporate & Securities Law

Compliance Week Survey: Sarbanes-Oxley Improvements on the Decline

By Toby Lucich

Exclusive new research from Compliance Week shows companies that made improvements to their internal control over financial reporting in the wake of The Sarbanes-Oxley Act of 2002 (SOX) are expecting fewer improvements over time. The results also suggest that Auditing Standard No. 5 (AS5)?a new, more relaxed auditing standard approved last year by the Securities and Exchange Commission?may not be helping to streamline SOX compliance as much as hoped.

A Compliance Week survey of nearly 300 public companies finds that three-quarters reduced their number of ?key controls? significantly during their first year of meeting SOX requirements?with 14 percent of them reducing key controls by between 60 and 80 percent. ?Key controls? are the internal checks and balances that companies use to ensure that their financial reporting processes are timely and reliable. Section 404 of Sarbanes-Oxley required that companies assess their controls and that auditors sign off on the effectiveness of those controls. In theory, as a company reduces the number of key controls, it simplifies its financial reporting process, decreases the risk of error or financial misstatement, and reduces the cost of SOX compliance.

Compliance Week Survey: Sarbanes-Oxley Improvements on the Decline

Full post as published by inside Sarbanes Oxley on March 04, 2008 (boomark / email).