Financial Reporting Improved Under 10-Year Old SOX Law: Survey

June 6, 2012

Corporations’ internal control over financial reporting has “significantly or moderately improved” in the 10 years since the Sarbanes-Oxley Act (SOX) became law, according to a majority of executives surveyed by the consulting firm Protiviti.

“Sarbanes-Oxley has had its share of controversy in the past, but nearly 70 percent of respondents in our survey reported that the internal control over financial reporting structure in their organizations has improved since compliance with Sarbanes-Oxley Section 404 became a requirement,” said Brian Christensen, Protiviti’s executive vice president, global internal audit. “Companies are still learning and working to improve continuously the quality of their internal controls as well as the effectiveness and efficiency of their compliance processes, even 10 years later.”

The majority of executives surveyed said they also are focusing on automation of their companies’ internal controls to realize the full benefit of the legislation; in fact, only 17 percent of respondents said they have no plans for further automation.

“Automating key controls likely represents the ‘final frontier’ in terms of significant Sarbanes-Oxley process improvement and cost savings,” said Jim DeLoach, Protiviti’s senior SOX practice leader and a survey architect.

Protiviti’s 2012 Sarbanes-Oxley Compliance Survey includes feedback from nearly 600 executives and other professionals who are involved with or have a stake in the SOX compliance process.

This is the third year that Protiviti, a subsidiary of Robert Half International Inc., has conducted the survey.

“Sarbanes-Oxley and its subsequent laws and regulatory guidance have had significant effects on corporate America,”said Christensen. “Over the past decade, opinions of SOX have evolved as much as the law itself. Our survey results reflect this changing sentiment.”

Other findings from Protiviti’s 2012 Sarbanes-Oxley Compliance Survey include:

The top benefit of SOX is “enhanced understanding of control design and control operating effectiveness” (44 percent), followed closely by “internal audit’s ability to perform more traditional audits” (43 percent).

Companies, regardless of size or year of compliance, plan to maintain their current level of spending on compliance in the upcoming fiscal year – a possible indicator that organizations have the compliance process well-managed and under control.

A majority of large organizations (73 percent) leverage their SOX compliance efforts to drive continuous improvement in business processes that affect financial reporting, and a significant majority of organizations that are beyond their fourth year of compliance (69 percent) do so.

Conducted in late 2011 and early 2012, the survey targeted professionals at companies with gross annual revenues ranging from less than $100 million to more than $20 billion. Respondents included chief audit executives, chief financial officers, corporate Sarbanes-Oxley and project management office leaders, chief compliance officers, and others involved with SOX. Eighty percent of respondents work for companies in or beyond their fourth year of SOX compliance and 68 percent are from large or accelerated filers. The survey is available here.

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