Monday, December 20, 2004

MSNBC: Latest Sarbanes-Oxley requirement draws mixed reviews

Dave Johnson isn't convinced that the work required to comply with the Sarbanes-Oxley Act of 2002 is worth the cost or effort.

"It's a great deal of work" at both the corporate level and at Sypris Solutions Inc.'s subsidiaries, said Johnson, Sypris' chief financial officer. "It is quite onerous."

The requirements, more commonly known as Section 404 of the law, include establishing that a company has internal policies and procedures to guard against fraud and hiring an outside auditor to verify those findings.

Those safeguards are a potential benefit of the legislation because they could make publicly traded companies stronger. But executives and accountants who are knee-deep in compliance said they are unsure that the end justifies the means -- and the work that comes with it.

The Section 404 requirements take effect this year, meaning that officials at public companies with more than $75 million in market capitalization must sign documents saying that their internal controls are strong and have been tested with their first reports in 2005. Then, starting in 2005, executives at public companies below that threshold must make the same disclosures.

"My personal opinion is that the second wave of compliance will be better prepared than the first wave," said Neal Spencer, partner-in-charge of the Louisville/Southern Indiana region of BKD LLP, a Springfield, Mo.-based accounting firm. "This is so new to everybody, and there is not really any blueprint of how to do this."

MSNBC: Latest Sarbanes-Oxley requirement draws mixed reviews

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