The survey Looking forward: evaluating early experiences with Sarbanes-Oxley of some 36 Sarbanes-Oxley project leaders from large foreign private issuers (FPIs) suggests that the experiences of companies in the US, which struggled to embed compliance in year one, risk being repeated by FPIs.
There is a real danger that the excessive costs of compliance in year one will recur in following years unless companies take steps now to stand back and review the robustness of their controls and compliance structures.
Well over a third (44%) of respondents view their Section 404 compliance efforts as an entirely discrete piece of work, unconnected to other compliance activities and processes happening within the business. Although creating 'controls consciousness' is considered to be a medium-to-high priority for 86% of those surveyed, 31% state that this has not to date been gauged within the company. Similarly, only 19% of respondents say that a formal mechanism exists for knowledge transfer from their Section 404 project team to management.
Nearly two thirds of respondents identify an excessive number of key controls within their organisation, which has a direct bearing on the amount of work required to document them efficiently. Respondents were split 50:50 on the question of whether they felt their processes for identifying and addressing control deficiencies were well established and working effectively. Both these factors have a very real impact on the cost of compliance in the future.
Helen Nixseaman, risk assurance services partner, PricewaterhouseCoopers, said:
"In the race to reach the year one compliance finishing post, businesses are not paying sufficient attention to successive years. This could mean some companies are lining-up major costs and added complexity for the future, which could be minimised or even avoided all together if they took a more structured and strategic approach from the outset."
