Kurt Schacht, managing director of the CFA Institute Centre for Financial Market Integrity, says companies that are complaining about the cost of Sarbox compliance should just get over it. He says costs are never going to drop to zero and, ultimately, American business is much better off with the legislation.
Kurt Schacht, managing director of the CFA Institute Centre for Financial Market Integrity, has one thing to say to businesses that are still concerned about the cost of Sarbanes-Oxley compliance, according to Financial Week: “Get over it.”
I have to agree. (If memory serves, I posted about a small biotech company that said the same thing here.) As Schacht told Financial Week:
Companies have to understand that the cost is never going to go back to zero. There is always going to be a fairly significant cost associated with putting the internal controls structure in place and having somebody review it on an annual basis.
Concerns over costs are valid, the story says, but in Schacht's opinion, companies are better served with Sarbanes-Oxley than without it. He notes:
[People] didn't really understand the degree to which controls had fallen by the wayside.
What the controversial law has done to maintain the markets’ integrity is far more important than concerns companies have about compliance costs, according to Schacht. And he’s not alone. Henry Wander, who is a principal with the law firm of Katten Muchin Rosenman, says those who are concerned about or unwilling to absorb the costs have an easy solution: Don’t go public.
Couldn’t have said it better myself. Allow me to draw an (admittedly) oversimplified analogy.
The current price of gasoline has a lot of people up in arms. Yes, it’s high. But it is what it is, as my boss said today. If it’s too high, use public transit, carpool with friends, walk or ride a bike to work. But if you’re going to drive your own vehicle, you have to pay the price. You can’t just fill up the tank and then tell the attendant you’re not paying for the gas — unless you want to risk theft charges.
The same is true for Sarbanes-Oxley. Yes, it’s costly. But it’s part of being a publicly traded company in this country. If you can’t afford it, you have three choices: Cut spending in other places so you do have the money, list in a foreign market where the costs aren't as high, or remain privately held. Is that so complicated?
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