Tuesday, November 23, 2004

Sarbanes-Oxley: Compliance Issues Can Mean Business Benefit

As a key section of the Sarbanes-Oxley Act took effect last week, companies continue to race against the clock to meet the act's rigorous financial-documentation and reporting requirements before the end of their fiscal years. And not all companies will make it.

Under Sarbanes-Oxley's section 404, most public companies are required as of Nov. 15 to include with their 2004 annual reports a statement containing management's assessment of the effectiveness of the company's internal financial controls, as well as corroborating statements from outside auditors. Companies whose fiscal year ends Dec. 31 have until March to issue statements.

PricewaterhouseCoopers LLP, which has a large compliance practice, reported last week that 70% of its clients have experienced "significant slippage" in meeting section 404 requirements, and 10% are at severe risk of not being in compliance. As many as 20% of companies will report "material weaknesses" in their annual reports, the Securities and Exchange Commission's chief accountant said in a recent speech.

Sarbanes-Oxley: Compliance Issues Can Mean Business Benefit

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