The day is upon us when the act of corporate compliance isn’t as cumbersome as saying the actual words.
It’s been slightly more than five years since the law was enacted (but enforced three years ago) and finally more U.S. public companies are reporting fewer weaknesses in adhering to Sarbanes-Oxley (SOX) compliance than ever before.
Compliance Week magazine unveiled its “2007 Financial Reporting & Internal Control Benchmarking Reports,” to show that across all industries, companies’ Section 404 compliance, disclosed annually, is almost squeaky clean relative to previous years.
Citing the latest industry data that complements this study, Compliance Week said that the researcher, Audit Analytics, reported internal control weaknesses down nearly 45% in the three years since SOX went into effect. Meanwhile, weaknesses reported under Section 302 of the law–where companies must disclose every quarter what errors they’ve found and corrected–are rising.
This actually makes sense. Both sections of the SOX legislation, which is becoming less and less controversial as it evolves, serve a similar purpose as they are meant to ensure accurate financial disclosure.