Enacted largely in response to U.S. corporate and accounting scandals, Sarbanes-Oxley has resulted in changes in controls and compliance practices at nearly 85 percent of large U.S. multinational companies, the survey found. However, only about a third of executives at those companies believe the new law of itself will restore investor confidence in the capital markets or aid their companies' ability to create shareholder value.

 

"Confidence in our markets was built over decades, and will not be regained simply by the passage of a new law," said Frank Brown, global leader of Assurance and Business Advisory Services at PricewaterhouseCoopers. "Executives credit Sarbanes-Oxley with providing a consistent, formalized structure for corporate governance and control. But, rules, standards and frameworks can only do so much. It will take demonstrated commitment to transparency, accountability and integrity to regain public trust."

 

The Sarbanes-Oxley Act, enacted last year, requires company executives, boards of directors and independent auditors to take specific actions to achieve greater corporate accountability and transparency. The intent of the law was to help restore public trust in U.S. business and corporate reporting.

 

A minority called the legislation "good and adequate" (9 percent) or "ill-considered and hastily passed" (15 percent).

 

Of the executives interviewed, 84 percent acknowledge that Sarbanes-Oxley has changed control and compliance practices in their company, but just four percent cited significant changes, and 27 percent, modest change, while 53 percent said the new law simply formalizes what their company has been already doing. Eighty-two percent expressed confidence their company is in full compliance with the law, while 13 percent said they had more to do.

 

Thirty-one percent of executives said Sarbanes-Oxley will restore public confidence in the capital markets, while 50 percent said the law will have no impact in itself, and 19 percent were uncertain.

 

The initial costs of complying with Sarbanes-Oxley were perceived as modest: only three percent say it has been very costly to implement, and 29 percent somewhat costly. In contrast, 46 percent say implementation has not been particularly costly, and 15 percent not at all costly. But 71 percent of surveyed executives believe that costs will increase over the long term -- including 12 percent expecting much higher future costs, and 59 percent somewhat higher. Sixty-five percent of executives said the Sarbanes-Oxley Act presents increased risk for their CEO, CFO, and other key executives who are required to certify the company's financial reports. Seventeen percent said those executives face much higher risk, and 48 percent generally higher risk. Only two percent expect lower risk, while 32 percent perceive no real change.

 

"Long-term costs and certification risks are the law's twin lightning rods for executives. Nearly 90 percent of senior executives are concerned about one or the other, and nearly half are concerned about both. It will take more time to determine if their concerns are well founded," Brown said.