Coming into compliance with new corporate reporting legislation is no easy task, according to U.S. companies polled by PricewaterhouseCoopers. In particular, survey respondents say the greatest challenge to their companies' corporate reporting and compliance efforts is the Sarbanes-Oxley Act of 2002, which was passed in the wake of accounting scandals at firms such as Enron and WorldCom.
CFOs and managing directors shared their compliance concerns in PricewaterhouseCoopers' latest Management Barometer, a quarterly survey of executives in large, multinational businesses.
According to survey results, Sarbanes-Oxley puts the greatest strain on corporate resources. Among 177 respondents, 84% called Sarbanes-Oxley a challenge. Of those, 49% described it as a "major challenge."
The state of existing corporate processes is one condition that has respondents worried. Only 39% of respondents rated one or more of their company's business information processes as highly effective. Nearly one-third describe at least one of their processes as less than acceptable.
"Sarbanes-Oxley compliance has drawn attention to some glaring weaknesses in business information processes," said Mike Willis, a PricewaterhouseCoopers partner, in a statement announcing the survey results. "Its extensive requirements are exposing recurring weaknesses in all major aspects of corporate reporting."
Another weakness of existing reporting systems is the amount of human intervention required. Two-thirds of respondents said their company's business information processes typically require significant amounts of human intervention or re-keying of data - or they lack imbedded compliance controls.
Only 15% of respondents said their reporting policies and procedures are fully automated; 71% said they're half manual, half automated; and 7% reported they are completely manual.
"In the midst of an information revolution, it is amazing how much time and energy is still expended manually obtaining, assembling, and assessing the data needed for management analysis," Willis said.
To make sure their reporting infrastructure gets up to snuff, 51% of respondents are considering investing in new technologies over the next 12 months. Respondents said ERP systems (40%) and data warehouses (39%) are the most effective tools for providing access to data and ensuring the control and reliability of that data.
Learn more about this topicSarbanes-Oxley compliance dates pushed back
IDG News Service, 02/27/04