With the thirteenth anniversary of the Sarbanes-Oxley Act approaching, organizations continue to battle complying with its regulations, among the seemingly countless other requirements across the globe.
The idea that companies might have learned to master SOX compliance since 2002 is simply farfetched.
The reality? Even given the fluidity with which SOX compliance is governed and regulated, few organizations have established the proactive corporate compliance program to truly protect themselves.
And, as the risks and consequences of noncompliance rise, SOX and global compliance are as critical as ever.
As the cost of global compliance grows, so does the cost of SOX compliance – both directly and indirectly.
In SOX Compliance – Changes Abound Amid Drive for Stability and Long-Term Value, Protiviti reports that, with increased scrutiny, external auditors are charging more to adjust for the additional time and attention that must be paid to your areas of compliance. 58% of surveyed organizations saw their external audit fees rise.
Other direct costs of SOX compliance also rose, with 25% of large companies shelling out $2 million or more in related costs annually, and nearly 60% racking up $1 million or more.
It’s clear that there’s a direct correlation to the size of an organization and the amount it must invest in SOX compliance, though smaller companies may feel a larger impact of these costs on their bottom lines.
As great as these direct costs are, indirect expenses are often more damaging and difficult to measure.
Personal liability for board members, C-Suite executives and management creates risks that impact not only the individual, but also the total leadership of your organization. Worse yet is the potential damage of a tainted reputation. Though largely incalculable, lost business from compliance failures is as damaging as any other cost of noncompliance.
Beyond rising costs, Protiviti’s survey also found that many organizations are overhauling their compliance programs, and with good reason.
As Protiviti writes:
“Companies that are able to respond to these considerable changes most effectively and with the most confidence do not focus on perfecting individual compliance activities. Rather, their target is on driving improvements in upstream business processes affecting financial reporting, as well as achieving higher levels of maturity in their overall compliance efforts.”
What the survey uncovered was that some of the most substantial improvements focus on IT and entity-level controls, most notably through process automation. The ability to remove several demands for human involvement helps reduce the cost of managing your compliances while making the process more efficient and less prone to error.
No longer are organizations looking at compliance management as just a necessity. Some are leveraging it as an opportunity to create great value – a strategic advantage.
This mindset is defined by proactive compliance, and it is the future of global compliance management.
Armed with this proactive approach that many companies continue to adopt, SOX compliance no longer remains a risk to your bottom line and reputation.
Learn the significant difference between reactive and proactive compliance to protect your business.
Topics: Proactive Compliance, Global Compliance, SOX Compliance
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