Cost of Compliance to S-OX?

December 19, 2005 11:29 AM

SOX Compliance Statistics?

Hi, I know this is quite a bit more "business-like" than most questions posted here, but I have gotten so much useful info at Ask-MF that I think I'll give it a try. I'm looking for some information on Sarbanes-Oxley compliance rate and how much it is typically costing Fortune 500 companies. I don't want to have to pay for some Gartner report or whatever so I would vastly prefer that this resource be free or close to free. I need this info to settle an arguement w/ a friend about the cost of compliance to government regs vs. the social good that it does. Also, if this info is broken down by annual revenue and/or industry, that would be exceedingly helpful. TIA!

posted by apark to law & government (6 comments total)

Perhaps you could take a look at the law itself at thomas.loc.gov and see if it has any provisions for reporting to something like the GAO.
posted by odinsdream at 11:36 AM on December 19, 2005

• FEI survey regarding costs of compliance with Section 404 of SOX.
• Post from The Big Picture discussing the impact of SOX on market capitalization.
• Article from BusinessWeek suggesting that compliance may cut costs for certain companies.
• Academic paper from Larry Ribstein discussing costs and benefits three years after passage of SOX.

posted by monju_bosatsu at 1:53 PM on December 19, 2005

need this info to settle an argument w/ a friend about the cost of compliance to government regs vs. the social good that it does.

Do keep in mind that

(a) SOX costs and benefits don't prove anything about regulation in general (except possibly disproving the thesis that ALL government regulation is worse than "letting the market alone", an absurd thesis for a variety of reasons); and

(b) That SOX could probably be modified to improve its cost-benefit ratio. (Specifically, there seem to be some good arguments that requirements should be lessened or dropped for smaller companies, but retained more-or-less as is for larger ones.)

In short, whether government regulation is good (cost-effective, if you will) or not depends critically on the details, which can properly be analyzed only case-by-case. And even if one concludes that a particular regulation isn't good (as implemented), it doesn't follow that dropping it - as opposed to modifying it - is the best action.
posted by WestCoaster at 2:43 PM on December 19, 2005

I work for a large company. The other day a coworker needed to transfer some files back and forth with another company. SOX compliance became an obstacle within our company for creating an ftp site, so he had the other company host the ftp site. From my perspective SOX means more bureaucracy.

Also Paul Graham wrote "This CFO is both the smartest and the most upstanding money guy I know. If Sarbanes-Oxley deters people like him from being CFOs of public companies, that's proof enough that it's broken."

I think the SUX law needs to at least be changed.
posted by gearspring at 8:59 PM on December 19, 2005

Hmm,

I'm generally in favor of SOX, but I can see that the bureaucracy can get out of hand. I wanted some hard data to argue over with my friend and didn't get any of that here, but I appreciate your inputs...
posted by apark at 12:59 PM on December 20, 2005

T. J. Rodgers is the CEO of Cypress Semiconductors.

Rodgers: Absolutely, especially in today's world, where boards are overly concerned with Sarbanes-Oxley [financial and accounting act] trivia — and I do mean trivia, because a huge amount of bandwidth has been taken away from companies as a result of that. You think, "OK, it's another regulation, who cares?" But the fact is, I've lost 30 percent of my board time to that stuff.
posted by gearspring at 3:41 AM on December 21, 2005