Yet again, the chorus of Sarbanes-Oxley critics out there have been shouted down by one bald fact: SOX compliance prevents financial restatements.

According to a new study due out this week from Audit Analytics, restatements fell for the third year in a row in 2009, from 923 in 2008 to 674 last year. The restatements themselves were down in every category that matters: average number of days restated, average number of issues per restatement, average dollar losses per restatement. Even the time necessary to calculate a restatement dropped in 2009. Any way the accounting department wants to cut it, the restatement crisis of the mid-2000s has receded. (Compliance Week is working to secure a copy of the report for publication as soon as possible, but I have seen an advance copy personally.)

The causes of restatements in 2009 were largely the same sorts of problems that always dog companies: debt, warrants and equity headaches; accounts receivables; compensation problems. Audit Analytics ranks the top five causes of restatements last year as:

• debt, quasi-debt, warrants & equity (BCF) security issues;
• expense (payroll, SGA, other) recording issues;
• accounts/loans receivable, investments & cash issues;
• deferred, stock-based and/or executive compensation issues;
• liabilities, payables, reserves and accrual estimate failures.

Compliance Week will have a full analysis of the report in the next week or two. The early facts, however, suggest that the Sarbanes-Oxley Act, as much as we all hate to admit it, is achieving its intended goal of making financial statements more reliable for investors. If you want evidence, compare the annual number of restatements between accelerated filers and non-accelerated filers for the past decade. Accelerated filers saw a steady march upward in restatements from 2002 until 2005—the year they first had to start complying with Section 404 of SOX, which requires strict testing of internal controls. From 2006 onward, the number of restatements fell, and continues to fall today.

Non-accelerated filers, however, have been exempt from most Section 404 even to this day. Restatements for that group reached the nosebleed number of 888 in 2006; they have since floated downward to 374 restatements in 2009, but that’s still well above the numbers the accelerated filers have been seeing. And remember, external auditors haven’t yet started any internal controls testing at non-accelerated filers.

The anti-SOX critics say Sarbanes-Oxley is a waste of time and money because it doesn’t prevent financial meltdowns. Well, Audit Analytics’ data shows a decrease in meltdowns since SOX compliance went into effect. The critics also SOX is a waste of time and money because we did all this improvement, and still had a financial crisis in 2008. Again, remember that SOX was passed to make financial statements more reliable for investors, and now we’ve seen fewer restatements since it went into effect.

As maddening as the financial crisis has been, it has largely been a crisis of flawed assumptions and reckless risk management coming home to roost—not accounting fraud. If Congress wants to pass another massive law to remedy the problems of the financial crisis, that’s fine. But it should not start rewriting Sarbanes-Oxley wholesale. That law is working just fine.