Looking forward: Evaluating early experiences with Sarbanes-Oxley

May 2006

PwC's research 'on the ground' with Sarbanes-Oxley project team leaders from FPIs shows there is a danger that the considerable costs and efforts associated with year one compliance are likely to be repeated unless steps are taken now to address a number of key challenges.

Looking beyond year one

The intense focus on the deadline is preventing businesses from treating the section 404 project as a milestone towards a larger goal of sustainable compliance. In many cases Sarbanes-Oxley is still seen as a stand alone project with limited or no integration with other controls and compliance activities. Little effort has been made to transfer knowledge to educate the business about good internal control which is likely to inhibit cost reduction and the delivery of efficiencies going forward.

Reducing the burden

The majority of respondents say that they have identified excessive numbers of key controls in their businesses – this has a direct bearing on the amount of work required to document them efficiently. Half are struggling to identify and fix control deficiencies in a cost-effective and considered way. Teams are allocating resource in an intensive manner which is pushing cost higher.

Getting the best value from technology

Companies are not taking full advantage of automation – including their existing in-house capabilities – to assist with compliance. Business critical system changes are being deferred and few companies are focused on implementing process improvement opportunities.

Challenging the status quo

Insights from the section 404 project should be used as a powerful catalyst for change. The real prize now is not simply compliance but to achieve cost reduction, improved control and tangible business benefits through a process of 'controls optimisation' – resulting in the right controls at the right cost for your organisation.

For hard copy of the survey, please contact Alastair Tatton.