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Thursday, April 28, 2005
Sarbanes-Oxley Act labeled success
WASHINGTON (MarketWatch) -- The Sarbanes-Oxley Act of 2002 is helping U.S. corporations improve their financial reporting and corporate governance, the chairman of PricewaterhouseCoopers said Thursday.
"I believe, over time, we'll see fewer major restatements, fewer [Securities and Exchange Commission] financial reporting cases and, ultimately, fewer incidents involving accounting fraud," PricewaterhouseCoopers Chairman Dennis Nally told a National Press Club event.
Nally's remarks focused on Section 404 of the act, which requires companies to report on their "internal controls" -- policies and procedures designed to ensure accurate financial statements.
Many companies have complained that the internal controls provision of the 2002 act is costly and time-consuming. The U.S. Chamber of Commerce has also lobbied for a break in some of the reporting rules.
The act has created extra business for accounting firms like PricewaterhouseCoopers, which assist companies in complying with reporting rules. Nally said his firm has worked for about 700 companies across multiple industries.
Nally argued against changing the content of the law and predicted that fewer companies will report internal-control problems in 2005 than they did in 2004.
"Section 404 has definitely laid the groundwork for sounder financial reporting and better investment decisions," Nally said.
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