SOX: It's not right... but it's OK

There is growing support in some quarters for the controversial Sarbanes-Oxley legislation - even though many of the supporters accept it is seriously flawed and the greatest benefits are actually accidental by-products.

While the negative effects on businesses and a likely backlash outside the US have been flagged up recently, with some European firms threatening to de-list in the US and the wording of the legislation being openly criticised, some within the industry believe elements of Sarbanes-Oxley will force companies into a common sense approach to their business.

But that's not to say they are embracing the new rules.

Speaking at the Better Management Live conference in Las Vegas, Lee Dittmarr, principal at Deloitte Consulting, said: "A lot of companies feel it is unfair that they have to go through Sarbanes-Oxley. They aren't happy but it has been a positive force."

Others attending the conference suggest SOX, as it is now commonly referred to, will force companies to develop the kind of transparency and accountability which should have been in place previously.

Wes Rehm, senior vice president of software maker SAS, told silicon.com: "Sarbanes-Oxley is not forcing people to anything they shouldn't have been doing already."

The only caveat to that, said Rehm, is the insistence upon public disclosure of information such as lost tenders and contracts, which will erode companies' competitive advantage. "I don't think anybody should ever have to say to the public and their rivals 'We've just lost a contract'," he said.

But despite the wrangling over the rights and wrongs of the legislation, the most immediate issue in need of addressing is the lack of buy-in from companies who are yet to get a handle on their compliance responsibilities.

Findings of a recent survey of CFOs and senior managers released at the Live event reveal that almost a quarter 'don't know' if their company is on its way to meeting compliance rulings and deadlines.

SAS's Rehm described the situation for companies currently wrestling with SOX compliance as "controlled chaos". Others would argue the use of "controlled" is perhaps something of an optimistic overestimation.

"Any company complying with Sarbanes-Oxley faces a huge challenge in that they don't really know what they have to do," said Rehm.

But Rehm doesn't believe the blame rests squarely with the companies yet to understand and implement measures needed to ensure SOX compliance. He believes the US government has confused the issue by passing incomplete, unclear and flawed legislation.

"This is an example of the government trying to do something good," he said.

Rehm confirmed to silicon.com that any implied criticism in the word "trying" was far from coincidental stating that many of the sections of SOX are too open to interpretation while others simply fail to communicate to companies and auditors exactly what needs to be done.