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What are some potential Sarbanes-Oxley trouble spots?
Home » Accounting » Sarbanes-Oxley » What are some potential Sarbanes-Oxley trouble spots?As mentioned earlier, one survey found that only thirty percent of chief financial officers supported Sarbanes-Oxley. There is a great amount of both positive and negative response to the law, and much of the criticism centers around the most difficult aspects of compliance, so they will likely be areas to gain your company’s attention as well.
Many observers have criticized the amount of red tape required by Sarbanes-Oxley. Corporations are spending hundreds of thousands, even millions, of dollars in added staff and paperwork. Even though Sarbanes-Oxley is a guardian rather than a punishment, to some degree, all companies are being punished because of the mistakes of a few corporations. Many observers, however, also argue that once companies have auditing procedures in place, it will become a little easier every year to maintain compliance with Sarbanes-Oxley. Companies, therefore, need to weather the storm and do the extra work now to comply, trusting that it will get easier later.
The cost of compliance especially hurts smaller publicly-traded companies, because they cannot afford all the compliance procedures. Some of these companies are simply pulling themselves off of the stock exchange, which is certainly an option. If your company is struggling with the cost of compliance, discuss your alternatives with experts to determine how your company should respond.
Finally, the natural response to Sarbanes-Oxley is often to simply throw money at compliance. In many ways, Sarbanes-Oxley is a confusing law, but it is important to spend money wisely. Find people you trust to advise you on compliance and talk with other companies to see what they are doing to comply. You cannot solve all the problems by throwing money at them.
There are many criticisms of Sarbanes-Oxley, and the law can cause headaches for businesses, but the reality is that the law is the new environment for businesses. You have to deal with it. Hopefully, it will have the desired effect of reducing corruption and safeguarding business investors and employers, but only time will tell. In the meantime, accept this new reality and bring your company into compliance.
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- What are some potential Sarbanes-Oxley trouble spots?