Sarbanes Too Costly Says SEC
Sarbanes Too Costly Says SEC
May 5th, 2006: The U.S. Securities and Exchange Commission's (SEC) acting chief accountant, Scott Taub, states "Our estimates were way off" for SOX implementation.
Cost for implementing Section 404 of the poster-child for corporate governance and compliance, Sarbanes Oxley, are sky-rocketing. This should strike a warning note in our region as 2006 is the year that some non-North American-base companies will also have to 'do the 404'. Section 404 refers to internal corporate controls.
This comes at a time when many SME's in the U.S.A. are lobbying to have controls amended or even lifted. The SEC, however, is staunch in its belief - publicly at least, that the costs are worth the benefits
This week, in fact, Taub threw the argument back at business. "I think all public companies of any size would tell you they recognize the need for internal controls. But then when we get into evaluating the effectiveness of that internal controls system ... they believe the costs outweigh the benefits".
A recent Price Waterhouse Coopers survey suggests that indeed business is having difficulty seeing the gains. According to the report, staggeringly only 19 percent of respondents said they had implemented any formal system to communicate findings from internal Section 404 review board to management.
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Compliance Costs Too Much For Banks