SARBANES-OXLEY "CELEBRATES" THIRD ANNIVERSARY

July 29, 2005

How times have changed.

With the third anniversary of the Sarbanes-Oxley Act coming up tomorrow, it's being reported that most financial executives view the law as a net gain overall for investors.

A survey by Approva Corporation reveals something of a reversal in the business sector's outlook regarding the legislation as 44 percent, compared with 43 percent expressing the opposite opinion, report the net gain.

The survey conducted by the business software company also revealed that 87 percent of senior financial managers cited the legislation as a "top priority" for their company boards.

When asked to select a phrase characterizing Sarbanes-Oxley, 42 percent of respondents said it is a "way to improve our business controls and processes." Also, 8 percent said it will primarily "improve investor confidence and help our business." In addition, 28 percent called it "a corporate tax."

In areas such as additional personnel, outside consultants, IT tools as well as internal and external audit, a "substantial majority" said costs had increased by less than 25 percent with almost one-fourth of respondents saying expenses had risen by less than 10 percent.

Regarding firms with more than $1 billion in revenue, 75 percent held cost increases for staff, tools and auditors to under 25 percent, with 52 percent posting cost increases under 10 percent.

Of the financial executives surveyed, 66 percent are using advanced documentation tools while 42 percent are automating the testing of controls. Also, 24 percent are outsourcing compliance efforts. Only 5 percent believe outsourcing is the most effective way to cut Sarbanes-Oxley spending. In addition, 37 percent said documentation tools are most effective and 29 percent view automated controls testing their key approach.

Other findings included: 62 percent of CFOs said their position is less desirable than it was five years ago due to the law; and 57 percent of executives surveyed believe Sarbanes-Oxley has made American firms less competitive globally.

By Glenn J. Kalinoski, Executive Editor, Customer Inter@ction Solutions