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It’s Time to Review Sarbanes-Oxley

It’s Time to Review Sarbanes-Oxley

by Rick Turoczy on May 31, 2006

Post-Enron, there is general agreement that after Sarbanes-Oxley was passed, financial reporting reporter requirements are tighter, internal controls have improved, and there is more transparency in the overall auditing process than pre-Enron. However, data clearly shows that the cost of the implementation of a minor provision of the Act now outweigh the actual benefits of the entire Act.

Section 404 of SOX is only 168 words long but is regarded as the most burdensome part of this legislation. This section requires both an internal audit of financial accounting controls and an external audit. The implementation of these audits has been costly and time consuming for all businesses and unaffordable for many small and medium-sized businesses that are trying to compete in the global marketplace. The SEC initially estimated the costs to comply with Section 404 to be $91,000 per company; some studies estimate that actual compliance costs have been 30 times that figure. And the indirect costs on our economy are incalculable.

It’s Time to Review Sarbanes-Oxley

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