The Compliance Chasm

A central debate in the effort to comply with Sarbanes-Oxley (Sarbox), particularly sections 302 and 404 which govern financial reporting and documentation of internal controls respectively, is whether operational benefits will outweigh the costs. RevenueRecognition.com and International Data Corp. conducted a survey of 220 business leaders in December 2004. The results suggest that while costs are front loaded, there is proportional value once companies get through the full compliance process. However, there are distinct differences between companies that crossed the compliance chasm and rated the effectiveness of major compliance activities equal to or higher than costs and those that did not.

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