Upfront: Sarbanes-Oxley's Footprint on Finance Deepens

The time burden Sarbanes-Oxley has placed on companies will linger after the initial phase of compliance.

Finance executives are coming to realize that Section 404 compliance is just the tip of the Sarbanes-Oxley iceberg. According to a recent survey of finance, IT and line-of-business managers by Ventana Research, companies with 1,000 employees or more believe the time burden that Sarbanes-Oxley has placed on them will linger even after they've completed the initial phase of compliance.

Survey respondents expect that finance departments will have to continue devoting an average of 11 percent of their energy on Sarbanes-Oxley compliance, an expenditure that could have a substantial impact on public companies' efficiency. In fact, Ventana researchers suggest that for the first time in more than a decade, the overall efficiency of finance organizations in Global 2000 companies may soon decline. If compliance continues to be a major burden, as respondents expect, some organizations will have to quickly find a way to cut the time they spend on risk management and attestation.

The study recommends that CFOs respond to this new environment by redesigning and restructuring financial systems to improve efficiency. In addition, finance should automate the administrative elements of oversight and compliance. Some may elect to use sophisticated software for this purpose. At the very least, the finance function should automate Section 404 documentation. If they haven't already done so, CFOs should start identifying the accounting methods and processes that must change for their compliance initiatives to be efficient.

Although software will play an integral part in improving compliance processes in almost all companies, the study revealed that respondents generally lacked knowledge of technology options. The report suggests that finance executives should establish technology committees that will determine how to employ IT systems to support process-efficiency initiatives.