According to the survey, 30% of executives had a favorable opinion of Sarbanes-Oxley, down from 42% in October 2002, according to a news release.
The Management Barometer also found that 91% of executives now say their company has made changes in control and compliance practices as a result of Sarbanes-Oxley, up from 85% in October. But that doesn’t mean they are getting cocky about it: 68% are confident that their entire company is in compliance with Sarbanes-Oxley, down from 82% last October. With more time and experience, far greater numbers have found it costly to bring their entire company into compliance. More executives also are concerned now about the long-term cost of control and compliance (the first figure is the October 2002 result while the second reflects the latest survey data):
- much higher long-term costs expected – 12%, 27%
- somewhat higher long-term costs expected – 59%, 58%.
On average, surveyed business leaders now expect 22.5 executives, other than the CEO and CFO, will be required to provide sub-certifications at their company – up from 18.6 initially estimated.
With all that taken into account fewer senior executives these days have a favorable opinion of Sarbanes-Oxley than was the case shortly after passage:
- a good and adequate response to problems in accounting and reporting – 9%, 7%
- a good first step in company accounting and reporting, but more needs to be done – 33%, 23%
- a well-meaning attempt, but will impose unnecessary costs on companies – 42%, 49%
- ill-considered and hastily passed legislation that won’t make any difference – 15%, 15%
- will actually harm rather than improve the capital markets – 1%, 5%.
Also, most respondents aren’t yet on board with the law’s purpose of increasing confidence in the capital markets with 50% of respondents disagreeing about the law’s impact, saying Sarbanes-Oxley has had little or no effect. Some 35% now think the law will help restore investor confidence in the capital markets, compared with 31% in the October survey.
“Sarbanes-Oxley has proven to be far more complex and has required companies to make many more changes in control and compliance than executives originally thought,” Ellen Masterson, global leader of audit methodology for PricewaterhouseCoopers, said in a statement. “Consequently, more business leaders are now uncertain that their company is doing everything it should to be in compliance.”
The survey covered 136 CFOs and Managing Directors of US based multinationals in June 2003.
The Sarbanes-Oxley Act, enacted last July in response to US corporate and accounting scandals, requires company executives, boards of directors, and independent auditors to achieve greater corporate accountability and transparency.