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If Compliance Costs Are Still Rising, Something Is Wrong

As Thomas A. Basilo, chairman and CEO of WithumSmith+Brown Global Assurance LLC points out in his commentary on the SEC's second reprieve for smaller companies to comply with SOX, companies need to resign themselves to the fact that SOX, as a concept, is here to stay.

Basilo also notes that the first year of compliance is time-consuming and expensive as companies and their external auditors undergo a learning curve. But second-year costs should drop significantly due to the fact that companies have completed initial testing documentation and streamlined their standards, they have utilized new technology to help rein in costs, and the regulatory agencies have backed off and given external auditors more leeway to apply judgment on the significance of the internal controls and definition of what constitutes a material weakness.

I'm not pointing any fingers here, but something is amiss if the combination of factors cited above is not beginning to yield cost reductions. Now it could also be the case that opinion polls like ours are a handy platform to keep waving the flag of unfair burden in front of the SEC. Something tells me it doesn't mean as much as it did last year, though.

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