Section 404: Lessons Learned ... and the Road Ahead


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Section 404: Lessons Learned ... and the Road Ahead

Steve Wagner
Partner & Co-Chair, Sarbanes-Oxley Steering Committee
Deloitte Touche Tohmatsu

Although cost of compliance with Section 404 of the Sarbanes-Oxley Act continues to be a lingering issue for executives whose companies are facing the second year of complying with the requirements, many chief financial officers are focused on making compliance a sustainable, long-term program and implementing business improvements as a result of their efforts, according to new publication from Deloitte & Touche LLP (Deloitte & Touche), one of the nation's leading professional services organizations.

Deloitte & Touche's "Sarbanes-Oxley Section 404: Lessons Learned ... and the Road Ahead," captures meaningful dialogue and ideas generated by CFOs across the country at Deloitte & Touche's roundtable series on Section 404 compliance held earlier this year.

During each roundtable session, CFOs and other financial executives shared their experiences in the first year of complying with the Section 404 internal control over financial reporting requirements, lessons learned, and plans for year two compliance. CFOs invited to the roundtables were also surveyed on their recent and future compliance efforts.

"Based on the roundtable discussions, and participants' survey responses, companies are moving from a 'get-it-done-now' mindset to a 'beyond compliance' mentality and approach, and viewing Sarbanes-Oxley as an opportunity to improve their business and gain competitive advantage," said Steve Wagner, managing partner of Deloitte & Touche's U.S. Center for Corporate Governance.

CFOs concur. More than 60 percent of CFOs surveyed in connection with the roundtables indicate that they plan to implement business improvements as part of their Section 404 compliance effort. Planned operational improvements cited include enhancing internal control processes, upgrading technology, and people-related improvements.

"Sarbanes-Oxley Section 404: Lessons Learned ... and the Road Ahead" publication provides an overview of the roundtable discussions and survey questions for several key areas of focus:

? Cost of compliance

? Benefits associated with Section 404 work

? ompany relationships with the independent auditor

? Scope and materiality

? Roles and responsibilities related to internal control

? Education and training

? Management's interaction with the audit committee

? Sustainability and improvement.

"This publication addresses the most pressing issues in the minds of our clients and should serve as a very useful tool for companies as they progress and move forward with their compliance efforts in year two," adds Wagner.

For more information visit www.deloitte.com

Steve Wagner and other leaders of Deloitte & Touche USA LLP and its subsidiaries are available for further dialogue on the roundtables discussions and survey.

Deloitte refers to one or more of Deloitte Touche Tohmatsu, a Swiss Verein, its member firms and their respective subsidiaries and affiliates. As a Swiss Verein (association), neither Deloitte Touche Tohmatsu nor any of its member firms has any liability for each other's acts or omissions.

Each of the member firms is a separate and independent legal entity operating under the names "Deloitte", "Deloitte & Touche", "Deloitte Touche Tohmatsu" or other related names. Services are provided by the member firms or their subsidiaries or affiliates and not by the Deloitte Touche Tohmatsu Verein.

Deloitte & Touche USA LLP is the US member firm of Deloitte Touche Tohmatsu. In the US, services are provided by the subsidiaries of Deloitte & Touche USA LLP (Deloitte & Touche LLP, Deloitte Consulting LLP, Deloitte Financial Advisory Services LLP, Deloitte Tax LLP and their subsidiaries), and not by Deloitte & Touche USA LLP.

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