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Survey Reveals SOX Compliance Chasm

Survey Reveals SOX Compliance Chasm

by Rick Turoczy on February 15, 2005

A central debate in the effort to comply with Sarbanes-Oxley (SOX), particularly sections 302 and 404 which govern financial reporting and documentation of internal controls respectively, is whether operational benefits will outweigh the costs.

A new survey of 220 businesses conducted by RevenueRecognition.com and International Data Corp. suggests that while costs are front loaded, there is proportional value once companies get through the full compliance process. However, a “compliance chasm” exists — companies that crossed it achieved more effective results at less cost.

In the survey, respondents were asked to rate the cost of six major Sarbanes-Oxley compliance tasks as well the effectiveness of those tasks for improving risk management. The costs and effectiveness ratings were approximately even for activities such as documenting accounting policies, certification and sign off on internal controls, certification of financial statements, and responding to external audit attestation processes.

However, there were two exceptions: the cost of documenting internal controls was rated substantially higher than its effectiveness for improving risk management; and the cost of remediation of weaknesses found was rated substantially lower than its effectiveness for improving risk management.

Survey Reveals SOX Compliance Chasm

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