Keeping up with SarBox Documentation Requirements

I’ve been thinking about Sox and the question “What is the single most challenging Sarbanes-Oxley issue today?

Search the internet, go to seminars, and speak with auditors. The impact that Sox is making on big and small public companies is profound. Studies report that small cap public companies ($100M or less in revenues), which in July 2007 were required to meet compliance with Section 404, are spending an average of 1.3% of their revenues to meet compliance requirements.

It doesn’t matter whether you’re big or small, as the Act does not make any distinction between sizes in its compliance requirements. To adhere to Sox’s requirements, it costs money.

Companies on average are expending thousands of staffing hours to meet just Sec. 404 compliance, which results in millions of dollars in G & A expenses.

While established companies strive to meet compliance deadlines and new companies rush to achieve initial compliance, most companies are faced with the intricacies of SOX.

Examining documentation generated by Sarbanes-Oxley efforts, most companies are asking themselves several questions: Are our processes well designed? Automated? Efficient & effective? How can we minimize this expense?

As an accountant in the private sector for over twenty years I ask myself what I would do to implement compliance.

Automated content management for current and archived documentation in key areas like transaction records, financial reporting, auditing, IT securities and internal controls would be a priority. Costs and complexity would be reduced, internal controls would be strengthened and integrity levels increased. The possibility of human error, lost documents or fraud would be minimized.

With increasing in-house staffing costs and professional expenses (auditing and legal) the key is to maintain compliance with the least impact on the bottom line. It’s not a question of how much you’re willing to spend, but how you can minimize what you HAVE to spend. Would I outsource? Maybe some or ALL? The answer may be yes. More about that in a future post.

--- Bridget Chandler, Controller, Documentation Strategies