Strategies for Sarbanes-Oxley Staffing

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For years now, we've heard that Sarbanes-Oxley is a problem because compliance is expensive and it keeps companies from focusing on the business of doing business. These are valid complaints, to be sure.


The February edition of Accounting SmartPros, however, reports that many companies are now blaming Sarbox failures on a lack of qualified personnel. Of 400 public companies participating in a recent Compliance Week study, the story says, "41.5 percent noted weaknesses due to insufficient staffing, poor training, segregation of duties" and other HR issues.


Writers Marcella LoCastro and Gary Popeck, of SolomonEdwardsGroup, say employing the appropriate staffing strategy depends on an organization's maturity in the compliance process.


For example, "large cap filers" have been dealing with Sarbanes-Oxley compliance for awhile now. They are in their fourth year of Sarbox compliance, and they should have internal Sarbox departments or teams rather than relying on external consultants. The writers say:

Maintaining internal SOX staffing resources within large companies provides the audit department with more confidence that the SOX staff will work best with other departments. They know the corporate culture and establish permanent relationships with the operating management and board of directors.

"Small cap filers," on the other hand, are just now preparing to meet Sarbanes-Oxley requirements. Though they should begin to generate in-house staff to deal with Sarbox audits, they will probably need to hire external consultants to help with the first audit, the writers say.


Private companies that are contemplating going public should also consider what it will take to staff their Sarbanes-Oxley efforts.


Regardless of the category a company finds itself in, the writers say, proper staffing of Sarbanes-Oxley teams or departments will lead to more successful compliance efforts and better audit results.