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Doing the Right Thing, Even When It’s Costly

Colleen Cunningham | April 28, 2009

As everyone reading these words knows, Congress enacted the Sarbanes-Oxley Act in 2002 to improve transparency and accountability in business processes and financial reporting. The intent was to increase confidence in public markets. Section 404 of SOX outlined the requirements for senior management at publicly traded companies to assess the effectiveness of internal controls, and for an attestation by their external auditors on that assessment.

Based on recent surveys, most believe that SOX has improved confidence in financial reporting. The question that many asked—and continue to ask—is whether the expense of SOX compliance was worth the cost. As we look at the current economic crisis, many are wondering why SOX did not prevent it, and some are calling for additional SOX-like regulation to manage this going forward. Critics counter with this argument: After all that was spent on SOX, why do we need additional regulation?

The reality is we can’t regulate or...

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