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2009).
Engle (2009) also notes that the costs of compliance in both monetary and human terms are greatly reduced by a willingness to embrace the regulation as a tool rather than shunning it as a "necessary evil." Though stating the obvious, he says what many in the business world simply couldn't bring themselves to hear just over a year ago, namely that "smart managers approach compliance before there is a problem that impacts the company and its stakeholders" (Engle 2009, p. 18). The issues at Bear Stearns and Lehman Brothers could have been prevented with regulation, but those at Enron and WorldCom were exacerbated by outright fraud, and the regulations provided by the Sarbanes-Oxley Act would have prevented such egregious mistreatment and mis-management of the company and its shareholders.
Strangely, the detection and prevention of fraud is not a benefit often perceived in the regulations of the Sarbanes-Oxley Act by companies, though the number of corporate executives who do believe the Act is effective in this regard is nearing the fifty-percent mark (FEI 2008). There are other perceived benefits that corporations are reporting alongside their lowered costs of compliance, however; more than half believe that their companies' financial statements have been made more accurate by compliance with the Sarbanes-Oxley Act, and over two-thirds report that investor confidence has noticeably improved in the period following the Act's implementation (FEI 2008). Though events following...
2009; FEI 2008).
This brings us back to the initial question: is the payoff for Sarbanes-Oxley compliance worth the cost? The only simple answer is, it's too earl to tell. Yet the most recent numbers definitely suggest that compliance is not the costly affair it was once thought to be, and confidence in the benefits of the new regulations has increased almost as quickly as costs of keeping up with them have decreased. The recent financial upheaval has made all of this somewhat irrelevant in he immediate future, but when the dust fully settle it is likely that we will see these trends continue. After all, greed and dishonesty could never really be good for business, right?
References
Chang, H.; Choy, H.; Cooper, W.; Parker, B. & Ruefli, T. (2009). "Measuring productivity growth, technical progress, and efficiency changes of CPA firms prior to, and following the Sarbanes-Oxley Act." Socio-economic planning sciences 43(4), pp. 221-8.
Engle, P. (2009). "Making compliance effective." Industrial engineer 41(8), p. 8.
FEI. (2008). "FEI Survey: Average 2007 SOX Compliance Cost $1.7 Million." Financial Executives International. Accessed 25 September 2009. http://fei.mediaroom.com/index.php?s=43&item=204
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