Despite the heat generated by having to comply with the Sarbanes-Oxley Act, it is illuminating that calls for its repeal were muted at last weeks SEC roundtable. Of course, many of the top brass present complained about the cost of compliance.

Instead they sought reform of specific elements of the Act. In particular, Section 404. Compliance with the requirements to confirm effectiveness of internal controls over financial report is expensive.

Public companies on average spend $4.36m on compliance with 404. The survey by Financial Executives International of 217 public companies found that they had additional audit costs plus heavy consultancy fees.

Whilst there has been widespread opposition to the Act from European companies, US firms at the roundtable were broadly supportive.

The event came amidst three trials. WorldCom, the ongoing HealthSouth trial involving Richard Scrushy and the upcoming Enron with Kenneth Lay.

All the participants recognised the value of the Act in tightening up financial reporting. However in the current environment, no CEO is going to bring bad publicity to his company.

To do so would prompt the question, what have you to hide?

There is no question that, broadly speaking, Sarbanes-Oxley was necessary, said John A. Thain, chief executive of the New York Stock Exchange, in remarks echoed by others at the roundtable.

"I'm a big advocate of 404, and I would not make any changes at this time." was the comment from Nick S. Cyprus, controllera and chief Accounting Officer for Interpublic.

Indeed many companies, including Microsoft claim to have uesd section 404 to strengthen their internal control processes.

William Donaldson, Chairman of the SEC produced figures on the effect of 404. 8% of 2,500 reporting companies had found material weaknesses.

Accounting firms that make up the Big 4, expect costs to drop by as much as 46% this year. A survey of 90 of their clients had found firms spending an average of $7.8m on Sarbanes-Oxley compliance.

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