The Unexpected Benefits of Sarbanes-Oxley

Van FEAR naar BENEFIT

Rondom het negatieve en dwingende imago van SOX lijkt langzaam een kentering te komen. Daar waar de primaire driver voor compliancy lang 'fear' is geweest, wordt 'value add' meer belicht. Wat mij betreft een gezonde ontwikkeling. Uiteindelijk is dat toch waar het uiteindelijk om gaat.

The Unexpected Benefits of Sarbanes-Oxley

Harvard Business Review article by Steve Wagner, Deloitte & Touche LLP and Lee Dittmar, Deloitte Consulting LLP

With the recent release of new guidance around Sarbanes-Oxley Section 404 compliance, companies continue to wrestle with how to strike a balance

In the wake of a series of highly-visible corporate abuses around the turn of the century, Congress passed Sarbanes-Oxley, which was intended to make corporate governance more rigorous, financial practices more transparent, and management potentially criminally liable for lapses. The first year of implementation was costly and difficult, far more so than companies had been led to expect.

In the view of a few open-minded firms, however, the second year of compliance turned out to be not only less costly and less difficult (as doing something for the second time often turns out to be), but a source of valuable insights into operations, which management has translated into improved efficiencies and cost savings. The areas of improvement go well beyond technical statutory compliance. They include a strengthened control environment; more reliable documentation; increased audit committee involvement; better, less burdensome compliance with other statutory regimes; more standardized processes for IT and other functions; reduced complexity of organizational processes; better internal controls over business relationships with other entities; and more effective use of both automated and manual controls.

The result they are seeking to achieve is not only shareholder protection, the principal purpose of the act, but also enhanced shareholder value. More than a year since the first deadline arrived, Sarbanes-Oxley still inspires fear—of enforcement actions, of the stock market's reaction to a material weakness, and of personal liability. Fear can be a powerful generator of upstanding conduct. But businesses run on discovering and creating value. Companies need to start viewing Sarbanes-Oxley as an ally in that effort.

This article was featured in the April 2006 issue of Harvard Business Review. To obtain an Adobe Acrobat version of this article, please complete this email form: Request a copy of the article.