Companies expecting some relief from Sarbanes-Oxley Act regulations for financial reporting had best think again, says an Atlanta consultant.
Joe Goodwin, a corporate governance expert and president of The Goodwin Group, said Congress is unlikely to review the tough legislation which was passed in 2002 after corporate scandals, such as Enron.
“The good news is Congress apparently is not going to re-open Sarbanes-Oxley in order to toughen it up,” Goodwin said in a statement. “But the bad news is that it won’t be weakened either, so public companies won’t be seeing any relief from the law’s rigorous demands next year.”
Compliance with so-called Sarbox standards is proving to be quite costly, Goodwin added. He said a Georgia company CEO told him compliance costs hit $5 million and another firm said it set aside $1 million to cover audit costs.
“Unfortunately, these situations are not uncommon,” Goodwin said.
Goodwin based his opinion in part on a discussion with newly elected US Senator Johnny Isakson, a Republican, who had talked with the head of the House Financial Services Committee and a co-author of the law.
“The committee recognizes there is a significant amount of pain on small and medium-sized businesses,” Goodwin said the Senator told him. “However, there is not an interest nor an appetite for reopening Sarbanes-Oxley, and that’s probably good for business, because any time something like that gets reopened, you never know what the end result might be.”
Goodwin Group: www.Goodwin-group.com