Today The Supreme Court will listen to a challenge to the Sarbanes-Oxley Act of 2002, the centerpiece of the government’s response to the watershed accounting scandals at Enron and Worldcom. There’s a chance that Sarbanes Oxley will be repealed, and if so it will confirmed what I thought-that Sarbanes Oxley (SOX) compliance is a waste of time and money. In February of 2004, I worked at Protiviti, a consulting firm that was created by former Arthur Andersen partners. I worked as risk management consultant and most of the work was Sarbanes Oxley compliance. Before working at Protiviti, I previously worked as an internal auditor for Deloitte & Touche and KPMG. SOX compliance testwork and narrative is similar to internal audit’s, but there was no one standard. Plus, the time the consulting team which included me “camped out” at a corporate headquarters for months documenting everything which seemed to mean nothing. It was frustrating work, and I am so glad I quit.
There’s an opinion piece in the Wall Street Journal that refers to a study:
In 2008, the SEC’s Office of Economic Analysis launched a survey of public companies to judge the results, and it recently posted the findings on the SEC Web site, after collecting data from thousands of corporations.
Section 404 is still consuming more than $2.3 million each year in direct compliance costs at the average company. The SEC’s survey shows the long-term burden on small companies is more than seven times that imposed on large firms relative to their assets. Are the internal controls audits helpful? Among companies of all sizes, only 19% say that the benefits of Section 404 outweigh the costs. More respondents say that it has reduced the efficiency of their operations than say it has improved them. More say that Section 404 has negatively affected the timeliness of their financial reporting than say it has enhanced it.