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As Goes SOX?

May 31, 2007 | Filed Under Technology, Compliance 

The financial gravy train ridden by auditing firms due to Sarbanes-Oxley compliance may be slowing down a bit.

ComputerWorld reports that average SOX compliance costs declined from $4.5 million in 2004 to $2.9 million in 2006. The main reason is not a surprise:

“Technology has a lot to do with the cost reduction,” said Sanjay Anand, chairperson of the Sarbanes-Oxley Institute. Public companies “are actually automating their controls. A good 20 to 30%, even as much 40%, of the cost reduction is actually coming from automated controls rather than manual controls.”

(A clear sign that SOX may be a bit over the top is that it has spawned its own institute.)

The experience that companies gained in automating processes due to Sarbanes-Oxley may now be extended to other areas of the enterprise. Lawyers know that a good deal of what constitutes ongoing legal services could be automated, or a least tracked better from a technology standpoint in the first instance.

That’s the start of any process improvement. Almost like magic, or like just adding water.

Update (1 June 07): One CEO writes in the Wall Street Journal that he doesn’t see Sarbox-related costs going down.