The Financial Times reports the results of a Compliance Week study on Sarbanes-Oxley results.
The study finds that the number of â€œmaterial weaknessesâ€ in these companies â€“ identified shortcomings in accounting controls â€“ fell to 5.9 per cent from November 2006 to May this year, compared with 16.7 per cent in the 12 months to November 2005.
There’s also the hint of costs coming down:
When Sarbox was passed in 2002, it was estimated that it would cost the US economy about $1.6bn (Â£776m, â‚¬1.1bn). By 2004, estimates of compliance costs rose to $4m per listed company â€“ or about $35bn.
However, costs have come down significantly at the largest companies which have developed systems for complying. Costs are expected to fall further after US regulators made it much easier to implement Section 404, the most contentious part of Sarbox that deals with internal controls over financial reporting.
That probably comes as news to most GCs and CFOs. While larger companies may have the systems and staff resources to realize efficiencies going forward, smaller companies may still be weighing the costs when they decide whether to go public. And where to go public.