New York (March 27, 2003) -- While implementation of Sarbanes-Oxley has resulted in changes in controls and compliance practices at nearly 85 percent of large U.S. multinational companies, only about a third of executives at those companies believe the new law will restore investor confidence in the markets or aid their companies' ability to create shareholder value, according a survey by PricewaterhouseCoopers.
Most senior executives (42 percent) who participated in the quarterly Management Barometer survey characterized Sarbanes-Oxley as “a well-meaning attempt, but will impose unnecessary costs on companies.” Thirty-three percent said it’s “a good first step in company accounting and reporting, but more needs to be done.” Another 15 percent said it was “ill-considered and hastily-passed legislation that won't make any difference,” while 9 percent said the act is “a good and adequate response to problems in accounting and reporting.” One percent said it “will actually harm rather than improve the capital markets.”
About one-third of executives believe S-O will restore public confidence in the capital markets, while half said it will have no impact, PwC reported. Nineteen percent were uncertain of its impact. While 84 percent of executives acknowledged that Sarbanes-Oxley has changed control and compliance practices in their company, 53 percent said the new law simply formalizes what their company has been already doing, while 27 percent cited modest changes and 4 percent cited significant changes. The vast majority (82 percent) expressed confidence their company is in full compliance, while 13 percent said they had more to do.
Executives perceived the initial costs of complying with Sarbanes-Oxley as modest. Forty-six percent said implementation hasn’t been particularly costly; 15 percent said it hasn’t been at all costly; 29 percent called it somewhat costly; while 3 percent said it has been very costly to implement. However, 71 percent believe costs will increase over the long term -- 12 percent of respondents expect much higher future costs, and 59 percent somewhat higher.
Sixty-five percent of executives said Sarbanes-Oxley presents increased risk for their chief executive, chief financial officer and other key executives who are required to certify financial reports. Seventeen percent said those executives face much higher risk, 48 percent expect generally higher risk, 2 percent expect lower risk, and 32 percent perceive no real change. Respondents expect an average of 18.6 executives, other than the CEO or CFO, will be required to provide sub-certifications at their company. Only 20 percent expect no additional sub-certifications will be needed, and 13 percent were not certain.
-- Electronic Accountant Newswire Staff
