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Tuesday, August 29, 2006
Sarbanes-Oxley: Lessons Learned
Organizations that need to be SOX-compliant are just now realizing they need to get serious about using technology to monitor and test their internal controls.
By Therese Rutkowski
September 1, 2006 - Many publicly traded companies are in their third year of dealing with the Sarbanes-Oxley Act (SOX)--the law that makes corporate executives responsible for the accuracy of their financial statements and for the internal controls that minimize errors and reduce fraud.
After going through the rigorous process of documenting and testing those controls, such as the segregation of duties and appropriate access to financial systems, many of these companies-including insurers-spent far more on the effort than they ever imagined.
A full 70% of respondents to a 2005 Ernst & Young LLP cross-industry survey on trends in internal controls indicated SOX compliance costs were more than 50% higher than originally estimated. In fact, the average cost of SOX compliance was $4.4 million, according to a March 2005 survey by the Financial Executives International, a professional association based in Florham Park, N.J.
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