Monday, December 27, 2004

Firms See Profit Boon in Sarbanes-Oxley

Though Wall Street executives might bemoan a new set of accounting rules that go into effect next year, analysts on Thursday hailed the law responsible for them as a financial windfall for firms that will help corporate America come into compliance.

The Sarbanes-Oxley Act - created in 2002 to tighten corporate governance after the Enron debacle - has become a boon to the profits of a handful of firms that provide professional accounting and finance services.

One recent example of this is Resources Connection Inc., a Costa Mesa, Calif.-based company whose shares surged Thursday after it reported that second-quarter earnings leapt 233 percent from last year do to heavy demand for Sarbanes-Oxley compliance. The company posted earnings of $15.6 million, or 62 cents per share, up from $4.4 million, or 19 cents per share, in last year's second quarter.

"There are a lot of companies that found the time and cost of compliance to be greater than expected, but on the flipside (for) any professional services firm it has created a perfect storm of demand," said Resources Connection chief financial officer Stephen Giusto. "All of the big four firms are maxed out helping clients comply, we're busy helping clients comply, and it is still remarkable how many companies are still working very hard to complete their requirements."

Firms See Profit Boon in Sarbanes-Oxley

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