As questions of cost continue to hang over the head of the Sarbanes-Oxley Act, companies in the UK should aim to learn from the US experience of 404, writes Jon Rowden
In May, the US regulators issued further guidance on Section 404 of the Sarbanes-Oxley Act. The move came as a result of the SEC’s round table a month earlier, where commentators noted the benefits arising from the first-time application of Section 404, but voiced concerns over costs.
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While putting a true price tag on implementation has proved tricky, earlier this year, the finance director of a multinational bank wrote to the SEC advising that his external costs were expected to be in the region of $50 million, while internal resource reallocation to Section 404 was likely, he said, to be twice that amount.
These high costs can primarily be attributed to two factors:
* Initial set-up costs are inevitably very high: many companies are documenting relevant systems of control in the first year, but few are expecting to carry out major documentation exercises in future years.
* Many US companies geared their 404 projects towards the end of the calendar year and, as a result, efficiency has suffered as pressure to meet the deadline intensified.
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