12 April 2005

CFO's vs. SOX 404...

The battle lines are heating up as more and more companies delay their reports on performance. The lines are being drawn in the sand over whether the SOX 404 compliance mandates are just too much for some finance and IT departments to handle. And the CFO Executive Board is shouting that this Sarbanes-Oxley Act is the reason we are losing jobs.

Candice S. Miller is now in the hot seat as the Republican from Michigan becomes the new chair of the House Government Reform subcommittee on regulatory affairs. Her first agenda item is the impact of regulation on US manufacturing. The CFO's in America are waving the white flag as they pretend to be drowning in regulatory compliance issues. The question now is whether all of this hard work on SOX 404 and other laws will ultimatley benefit corporate America. The answer is yes.

In the long run not only will the investor's win, so to will the executives who have devoted so much time and energy into regulatory and legal compliance. As stewards of the enterprise and overseers of their own corporate sandbox, they will soon realize the investment in their own organization has been a prudent one.

For more on the CFO Point of View, see this proprietary report by the CFO Executive Board.

The report includes the predictions of a proprietary model the CFO Executive Board built to estimate the impact of Section 404 compliance activities on the US economy.

A key finding reveals that unless senior corporate executives take extraordinary measures to ensure that Section 404 compliance efforts do not crowd out key managerial activities and R&D investments, these requirements threaten both economic growth and job creation. More specifically, the report concludes that Section 404, as implemented, could retard job creation by more than 300,000 jobs and slow GDP growth by nearly 0.5 percent during the next three years.

"When you consider that Sarbanes-Oxley was drafted in only a few months, it's not surprising that companies have experienced serious, unexpected problems and high costs in complying with these new requirements," says Scott Bohannon, executive director of the CFO Executive Board

Of course, not all the news is bad.

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