Sarbanes-Oxley Study Finds More Boardroom Changes

Corporate directors are increasingly confident that their companies are prepared to implement Section 404 of the Sarbanes-Oxley Act, but not all of them believe the section’s internal control reporting requirements will make much of a difference in the quality of their companies’ financial statements, says one new study of corporate directors of publicly traded companies.

According to an article on the SmartPros website, the third annual "What Directors Think" study by Corporate Board Member magazine and PricewaterhouseCoopers measured the opinions of directors and CEOs of the top 2,000 publicly traded companies. The survey findings, SmartPros says, reveal continuing changes in directors' attitudes and actions.

The study found that 82 percent of directors believe their company is prepared to implement Section 404, but only 50 percent of directors surveyed think Section 404’s internal control reporting requirements will make a difference in the quality of their company's financial statements. In addition to that, only 44 percent think Section 302 - certification of financial statements by the CEO and CFO - will make a difference.

"Reporting on internal control is a watershed event for many companies, especially those that had decreased their focus on control systems over the years," Garrett L. Stauffer, partner and corporate governance leader at PricewaterhouseCoopers LLP, told SmartPros. "The significant efforts required for first year compliance have, in some cases, shifted directors' and management's focus away from addressing corporate strategy and performance. The challenge in future years will be to ensure 404 compliance efforts don't divert management's attention from growing shareholder value."

Three-fourths of directors surveyed said they thought Congress should revisit the Sarbanes-Oxley Act to correct some of the unintended consequences.

To read the full article, click here: http://www.smartpros.com/x45683.xml