Did Sarbox Make Companies Cleaner?

December 13, 2006 from CFO.com – “On the eve of a highly anticipated Securities and Exchange Commission meeting that could bring about looser regulations for small businesses that have yet to comply with the Sarbanes-Oxley Act, a new study credits the 2002 law with cleaning up larger companies' internal controls and reducing the number of errors in financial statements.

In fact, the Glass Lewis & Co. report — released on Tuesday — says the number of restatements by larger companies fell 26 percent during the first nine months of 2006. The report's authors attribute this decline to the most contentious provision of Sarbox, Section 404, which requires management to attest that their company has adequate internal controls.

180 View – That’s good news. But the question still remains whether the benefit exceeded the cost.