A CEO Perspective on SOX

by Dominique Trempont, Guest Author

The vast majority of my CEO colleagues know that the Sarbanes-Oxley Act of 2002 was enacted as a reaction to the Enron and WorldCom scandals. It comes as a strong remedy to ensure the day-to-day accountability of the Board of Directors, CEO, CFO, CIO in their role of compliance and oversight vis a vis the financial market and public stock owners.

There is however a sense that lawmakers went too far and that companies simply cannot afford the cost of implementing the Sarbanes-Oxley Act (SOX). It is prohibitively expensive: it can cost 1-3% of a public company’s revenue and a significant share of the profit, at least in the initial implementation phase. Did Congress and the President go too far? I don’t think so. In fact, SOX is common sense.

Let’s examine some of the issues that SOX is designed to uproot.