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Published on: 08/01/2008
Type of content: White Paper
Format: Adobe Acrobat (.pdf)
Length: 5
Price: FREE

Overview
Consultants. Rising audit fees. Dozens of new internal auditors. Executive meetings. Revenue-generating projects put on hold. The tangible costs of Sarbanes-Oxley compliance hit almost every public company in the United States and will soon reach many more around the globe.

And while executives seek to drive down these substantial compliance costs, another expense of SOX compliance continues to rise: employee morale and job dissatisfaction.

Nearly half of financial executives feel the biggest issue related to SOX compliance is the need to maintain the morale of the employees responsible for compliance, according to the 2005 Oversight Systems Financial Executive Report on Sarbanes-Oxley.

The survey results hit on the key compliance issue: SOX compliance presents ongoing requirements and companies cannot afford to repeat their year-one compliance efforts. The tangible costs have been extremely high while compliance burdens employees with extra work, which the employees view as redundant, unnecessary and a distraction from their real job and their goal of creating enterprise value.

Low employee morale and high job dissatisfaction present hidden expenses to SOX compliance, but the costs can quickly add up. First, a rise in employee turnover leads to direct expenses in job training as well as repeating the compliance education that went into year-one SOX compliance. Second, low employee morale threatens the business benefits achieved in the first year of SOX. And finally, executives must recognize the threat to the company's culture and its tone toward financial integrity and compliance.

While the costs of Sarbanes-Oxley compliance continue to add up, executives must recognize the hidden costs that are not as obvious as the increased audit fees and consulting engagements. Employee morale is an issue that must be addressed. Linking SOX to business improvement and automating the rote tasks of compliance are two solutions to this problem.

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