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Latest NewsGlobal HR

US firms complain of high cost of scandal avoidance

by Personnel Today 11 May 2005
by Personnel Today 11 May 2005

Business leaders in the US are complaining to regulators about the cost of complying with a provision of the Sarbanes-Oxley corporate reform law – designed to prevent a repeat of scandals such as WorldCom and Enron.

With a negative public image and continuing disclosures of fraud and criminal prosecutions, corporate America is not publicly questioning the law’s necessity, but is arguing that Section 404, which requires the assessment of internal controls for keeping records and preventing abuse, is too costly.

A recent survey of 217 publicly traded companies showed they spent an average of $4.36m (£2.3m) to comply, while a smaller survey pegged the cost at $7.8m (£4.1m), or about 0.1% of revenue.

Both surveys found that compliance costs drop by as much as 46% as companies became more familiar with the law.

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However, the US Securities and Exchange Commission (SEC) is to consider ways to provide more guidance on the future requirements of Section 404.

Of 2,500 companies filing with the SEC in March, 8% found material weaknesses in their internal controls, which can be as simple as requiring two signatures on company cheques.



Personnel Today

Personnel Today articles are written by an expert team of award-winning journalists who have been covering HR and L&D for many years. Some of our content is attributed to "Personnel Today" for a number of reasons, including: when numerous authors are associated with writing or editing a piece; or when the author is unknown (particularly for older articles).

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Personnel Today
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