In fact, only 37% said they intend to spread their compliance activities out on a longer horizon. This is due to the majority of companies having already becoming involved in the planning and the design of controls, according to PricewaterhouseCoopers’ Management Barometer.
Already 83% of companies are in the early stages of solving and identified problems, compared to 14% in the middle of this process and 2% near completion. Additionally, 77% are testing control effectiveness, with 20% in the middle and 2% near completion.
With the extra time though, the vast majority of those surveyed (86%) expect to streamline and reduce the cost of their company’s Sarbanes-Oxley compliance process in calendar year 2004. Of those, 23% expect to place a major focus on cost reductions, 50% expect to give cost cuts moderate attention and 13% limited attention.
The latest results come as Section 404 of the Sarbanes-Oxley Act, which requires companies to file a management assertion and auditor attestation on the effectiveness of internal controls over financial reporting, had its compliance date extended until June 15, 2004 for US filers.
However, “most big companies are well along in their planning and are in the process of documenting and evaluating their controls,” said Lynn Edelson, Americas Leader of Systems and Process Assurance for PricewaterhouseCoopers, in a statement. “But there is a tremendous amount of work to be done in testing the effectiveness of internal controls and solving any problems that are identified. Companies that have not yet begun their preparations need to start immediately.”
Among the work that still remains unfinished, over three quarters (76%) of companies report that their audit committee expects more extensive testing of internal controls over financial reporting this year, compared to only 17% that say more testing is not expected. Additionally, nearly two-thirds (64%) expect their external auditor to perform more extensive testing of internal controls over financial reporting this year. Twenty percent do not expect more testing and 16% are not sure.
Elsewhere, more than a third (36%) of companies are planning or considering preparation of a management assertion and auditor attestation in fiscal 2003. The remainder (57%) is not, or is uncertain (7%).
PricewaterhouseCoopers’ Management Barometer is a quarterly survey of senior executives in large, multinational businesses. It is developed and compiled with assistance from BSI Global Research, Inc., which interviewed 70 CFOs and Managing Directors of US-based multinationals in July 2003. More information can be obtained by contacting Pete Collins at 646-394-4496.