Sarbanes Oxley Compliance – No Easy Trick

Sarbanes Oxley compliance must be achieved by the June deadline that is quickly rolling around. The need for this Sarbanes Oxley compliance has arisen due to the passing of a new law back in July of 2002. The law, also known as the Public Company Accounting Reform and Investor Protection Act, calls for publicly traded companies to start making additional disclosures on their internal controls, the structure of their audit committees on annual reports and descriptions of ethics codes. It will not be easy or inexpensive for many larger companies to assure the June deadline will be met for their Sarbanes Oxley compliance.

Sarbanes Oxley compliance will involve internal watch dog type financial controls for many companies. Those companies that already keep accurate and traceable accounts will find the transition to Sarbanes Oxley compliance to be a bit smoother. Many larger companies are tasking their accountants to tens of thousands of more audit hours and some are instituting new software programming to insure their Sarbanes Oxley compliance by June of 2005. These extra man hours and software packages do not come cheaply but will outweigh the detriment of not attaining satisfactory Sarbanes Oxley compliance. 

Sarbanes Oxley compliance will be far wiser for companies in the short and long term than non compliance for a couple of reasons. Punishments will now be stricter for those companies that do not have adequate self monitoring structures in place. Severe lawsuits and potential jail time will be very real possibilities for those companies that fail to meet Sarbanes Oxley compliance requirements.  These possibilities may seem harsh, however, in the wake of the many corporate scandals involving publicly traded companies over the past few years most companies are embracing the more stringent accounting requirements. The trade off to meet Sarbanes Oxley compliance is a bit of a headache as the total industry spending on bringing companies up to code is expected to exceed $5 billion dollars this year alone. The real trick to meeting the deadlines is assuring that the goals of the law are not only met, but that the companies maintain into the future ongoing Sarbanes Oxley compliance.

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