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Sarbanes Oxley : Technology : Section 404
BDO Seidman Survey Section 404 Has Improved Processes
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Hank Galligan
Partner
BDO Seidman
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According to a new survey by BDO Seidman, LLP, one of the nation’s leading accounting and consulting organizations, a majority (65%) of chief financial officers at leading U.S. technology businesses believe that Section 404 of Sarbanes-Oxley has led to improved processes. When asked which financial reporting requirement poses the greatest challenge, in terms of compliance, a large percentage of CFOs identified both Section 404 (49%) and FIN 48 (36%). Only 12% cited 409A and three percent said it was other requirements.
These findings are from the BDO Seidman 2008 Technology Outlook Survey which examined the opinions of 100 chief financial officers at leading technology companies located throughout the U.S., including a subset in the Silicon Valley. The technology businesses in the study have revenues ranging from more than $100 million to $15 billion. The survey was conducted in January of 2008.
“Although technology companies were hesitant to adopt Section 404 of Sarbanes-Oxley, the majority have realized improved processes due to their compliance efforts and do not believe 404 has adversely impacted their level of risk-taking,” said Hank Galligan, a Partner in BDO Seidman’s Technology Practice. “The CFOs at these technology companies are also very optimistic that 404 costs will stabilize this year.”
Other major findings of the 2008 BDO Seidman Technology Outlook:
SOX – Section 404:
- Benefits. Although there has been much criticism of the difficulties involved in complying with Section 404 of Sarbanes-Oxley, almost two-thirds (65%) of the CFOs of tech businesses feel that 404 has led to improved processes, compared to just over a third (35%) who feel 404 has curtailed innovation at their businesses.
- Risk? While thirty-nine percent of these financial executives believe Section 404 has curtailed corporate risk-taking at their companies, a majority (59%) feel risk taking has not been impacted.
- Costs Stabilizing. A majority (53%) of the CFOs believe their 404 compliance costs will stabilize this year, compared to twenty-two percent who anticipate costs to climb and twenty-four percent that expect a decline.
- Inhouse, Outsource or Co-source. Over half (54%) of technology companies manage their Section 404 compliance functions in-house versus only eleven percent that outsource the function to an external provider. Just over one-third (35%) of the CFOs indicated they manage their 404 compliance through a co-sourcing relationship (a combination of in-house and outsourcing) with an external provider.
BDO Seidman, LLP is a national professional services firm providing assurance, tax, financial advisory and consulting services to a wide range of publicly traded and privately held companies. Guided by core values including, competence, honesty and integrity, professionalism, dedication, responsibility and accountability for almost 100 years, we have provided quality service and leadership through the active involvement of our most experienced and committed professionals.
BDO Seidman serves clients through 35 offices and more than 300 independent alliance firm locations nationwide. As a Member Firm of BDO International, BDO Seidman, LLP serves multi-national clients by leveraging a global network of resources comprised of 621 Member Firm offices in 110 countries. BDO International is a worldwide network of public accounting firms, called BDO Member Firms, serving international clients. Each BDO Member Firm is an independent legal entity in its own country. For more information go to www.bdo.com
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