Many companies' efforts to comply with Sarbanes-Oxley have included hefty investments in planning and internal management reporting but have left financial consolidations as primarily Excel-based processes. Here's why they should rethink that policy.
As U.S.-based public companies enter year two of compliance with Section 404 of the Sarbanes-Oxley Act, there is a continued outcry that the costs of complying are way out of line. My conversations with affected corporations, compliance service providers, and auditors indicate that in their first year of meeting Section 404 requirements, most organizations spent between $1 million and $3 million on consulting services per billion dollars of company revenue.
Despite these substantial figures, however, many businesses failed to invest in comprehensive software systems that could ease their future compliance burden. The market has seen the emergence of a slew of applications that can assist in financial process management and compliance assertions by providing a more effective and collaborative environment than the popular PC-based products that consulting firms offer. These applications are becoming increasingly popular.
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