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U.S. Securities and Exchange Commission

Responses to ACSPC Request for Public Input

General Impact of Sarbanes-Oxley Act

Question Has SOX resulted in a diversion of the attention of company management away from operational activities, or otherwise imposed an opportunity cost on the management of smaller public companies? If so, have the benefits of SOX justified the diversion or opportunity cost? Please explain.

The following answers have been received:

08/02/2005 13:57:44   Some of my clients compare SOX to a major lawsuit against their company in terms of diversion of time and effort.

08/02/2005 17:44:12   Yes, no for smaller companies full SOX compliance due to the cost and complexity does not have enough benefit to offset lost opportunity costs. Most investors in small companies are aware of the risks involved. Risk factors are already a very significant factor in public filings.

08/02/2005 18:15:55   benefits of sox to small companies is nil

08/02/2005 23:36:32   Not for smaller companies.

08/03/2005 01:39:17   Our company has just completed eight months of the 404 audit. The last four have consumed almost 100% of the time of our finance staff, systems staff and CEO. This distraction from operations is tremendously destructive, and constitutes the primary focus of our entire management.

08/03/2005 07:01:34   absolutely, this is a retorical question and the fact you asked it is evidence thereof...

08/03/2005 08:55:04   Yes, most definately. No the cost has not. It takes us away from doing our normal everyday business. As a bank we are regulated by FDIC and State Examiners so we are always being looked at. This should be factored into our compliance with SOX

08/03/2005 08:58:39   We are spending an enormous amount of time trying to conform to SOX. It takes away from our other duties and we can not spend the time we need with our customers.

08/03/2005 10:40:26   Absolutely. As a CEO of a small community bank, I used to spend 80% of my time managing and planning. I now spend well over 60% of my time dealing with regulations, including SOX compliance. It is reaching the point where an auditor should be the CEO of the company, not a manager.

08/03/2005 11:03:25   Absolutely, much of our management's attention has gone from meeting needs of customers and our community to trying to get a handle on SOX, and trying to determine how we will complete our documentation and testing. Also it has put a damper on expanding and exploring new opportunities. Small companies have many hats to wear on a small number of heads. Sox requires a lot of attention and time from top management, with little benefit.

08/03/2005 12:17:58   yes

08/03/2005 13:55:42   YES YES, so much time, effort and money go into sox.

08/03/2005 15:01:40   SOX definitely diverts time away from important competitive and operation activities. There have been benefits from SOX with improved financial internal controls but the costs of the controls have probably exceeded the benefits. As stated before, we have solved the problem by hiring more people.

08/03/2005 15:22:49   We are a small fincial company with six holding company officers. In addition to corporate duties, each have primary responsiblities for customer service and profitablity at our two subsidary bank levels. Much time to date has been spent on SOX with too much yet to come in the this years fourth quarter and first half of next year. Our controls are in place, but to documents these to satisfy our External Audit group is going to focus our small management teams attention fully to SOX at the expense of customer service....the true reason for our being. The tail is going to be wagging the dog!!!!

08/03/2005 16:58:51   Most definitely. We are putting a lot of emphasis on how deciding how to attack SOX. Once we decide, we'll have to put a lot more time in the actual work. This time and the related fees will seriously effect our ability to make other changes and/or to grow as fast as we would like.

08/03/2005 18:01:35   Please look into item no 29

08/03/2005 18:05:44   SOX has caused a diversion of attention of management away from operational activities. The benefits of SOX, if there are any, do not justify the diversion. Management of smaller companies is spread thin. Any diversion away from operations is a negative.

08/03/2005 18:30:29   x

08/03/2005 19:54:33   I am not privy to the insider actions, except to read what news releases they provide through 8K reports. From what I read, they still have operations ongoing, but also from the tones of the letters, they have their primary focus on addressing the issues presented by the SEC, in an attempt to prevent the company from being revoked. If SOX had been properly and completely implemented, I don't think this company would be in the current predicament.

08/03/2005 19:55:50   INTEGRITY!

08/04/2005 09:17:19   Sox has resulted in a diversion of management away from operational activities. In banking for instance, it isn't what is best for the customer, it is what is in the best interest of the bank. We try to continue to do use the philosophy " we are still bankers", but it is hard to convince those on the front line having to deal with the customers on a day to day basis. The benefits of SOX are seen by different areas different ways. For instance, in the internal audit/compliance area, the results of 404 can be seen even though those actually doing it don't appreciate it (because of inconvenience that may be caused to the customer.)

08/04/2005 09:37:56   Yes - and no - see above

08/04/2005 09:39:15   If the company's management is fully engaged in the SOX process and try to leverage the SOX process, the company will increase operating effectiveness, not hinder.

08/04/2005 10:40:16   This has ABSOLUTELY diverted management attention. We are a bank that is already heavily regulated but we still have to document our compliance.

08/04/2005 12:09:05   No. As previously stated, the opportunity cost is staggering. As a CFO, SOX has transformed my position into a full time regulatory hawk. To prevent our company's financial and risk management performance to stay on our successful tract, I have had to hire internally to handle the "new CFO function" so I can devote time to running the business' financial aspects. Many of my peers have not awoken to the realization, and their companies will suffer as they spend more and more time on documenting control logs and less on risk management.

08/04/2005 13:38:24   SOX has not been a diversion for executive management. It is a very good risk assessment tool, but it has certainly been a diversion for our internal audit department. We are working this year (1 year after implementation) on how to better incorporate the control testing in our existing internal audit approach.

08/04/2005 13:53:47   The accountants should be the ones looking at the details of SOX.

08/04/2005 14:20:27   Definitely, we are to busy on non-value added regulations, and we are not foccused on building a business and value for shareholders.

08/04/2005 18:05:44   SOX section 404 has resulted in a huge diversion of time and attention away from the running of a business to document, test and certify controls. This is in addition to added outside costs.

08/05/2005 10:54:31   The first year of SOX was a diversion to company management, auditors, and investors. Any regulation that is born out of Congress based upon recent headlines and rushed for implentation will be a diversion. Sox should have been implented in a much more regemented fashion. Accounting firms were huddling together to determine how the regulation would be interpeted. The PCAOB was issuing guidance and changing guidance to the accounting firms on an almost daily basis. Accounting firms were revising their guidelines accordingly. All of those changes in the process and how to appropriately handled the process were a diversion to management.

08/05/2005 12:38:34   No! See item #5

08/05/2005 12:44:28   I do not beleive there are any significant benefits to SOX. It appears this was Congress' reaction to the Enron and Worldcom failures but was aimed at everyone. Why punish the entire market for the indiscretion of a few rotten apples?

08/05/2005 15:34:53   Absolutely - We are a small company. We have 125 people in 11 buildings in a 50 mile radius. We have to comply with the same rules as a company that has 125 people in their accounting department. The president and I are spending hours on accounting and audit reviews that should be spent on running the company or planning for our future.

08/05/2005 15:43:46   In community banks the time of the audit committee and the board - composed of non-control experts - is being diverted from cardinal issues such as asset & liability management, credit supervision and strategic planning. The extent of effect is debatable at this time but minutes and agendas show time commitments and balance of time spent.

08/05/2005 16:45:38   SOX is the smartest weapon in the regulatory arsenal, but its use has not been fully and adequately explored. The idea that accountability is not required is simply unacceptable, when we have too many examples of companies willing to show no moral compass or ethical adherence to acceptable standards of business behavior. Companies that are not well established enough to adhere to standards should not be seeking to go public, but to grow first through revenue expansion and organic growth rather than public funds. To be a success, you can be a privately held company - there are many privately held companies that are huge successes and I would say that "going public" is not always the best strategy, but rather the quick "cash out" strategy that many people want. I would rather be a success as an entrepeneur in private business than to go public with a company not ready to be public. The problem is that there are many publicly traded companies that are not winning business models - and that is a bad environment for public company investment. Better to build than to burn out.

08/05/2005 19:33:08   It has a very large and negative impact on managment focus. Small companies are always tight on resources both cash and staff.

08/06/2005 13:52:06   Yes, significant diversion. Caused deferral of numerous process and systems improvements needed to serve business needs while resources were spent on SOX compliance. Very little real return on SOX work.

08/08/2005 11:10:11   SOX has not justified anything good for small companies

08/08/2005 11:39:29   Our back office operations are more effective now. However, many of these same requirements are placed on us due to the heavy regulations of banks by FDIC and OTS (we are a thrift). FDICA requirements are a streamlined version of SOX. As a result of SOX, the entire management team spent six months focusing on improving documentation standards to ensure complaince. While this serviced a purpose, it was six months not focusing on growth and income opportunities. Our local community bank competition did not lose this time and in essence gained a valuable competitive advantage that we can never make up.

08/08/2005 14:06:10   The simple answer to the first question is yes, it does divert attention of management away from operational activities. How could it not? Ask any CFO of a smaller public company right now and they will tell you that they are going to be devoting a significant amount of time to complying with SOX 404. Most smaller companies do not have the infrastructure in place to be able to achieve compliance without outside assistance. So they hire outside consultants to manage the process for them. But that has become a very expensive proposition, one that the major CPA firms have profited handsomely from, and I'll bet that they can't even justify the cost benefit relationship. They'll just say it has to be done or else. There is both an opportunity cost and a direct cost imposed on smaller companies and the benefits, either to the company directly or to the overall financial markets, simply do not justify the cost.

08/08/2005 15:43:24   Smaller companies have to deal with a lot of process improvemnts during the SOX 404 implementation before they document and test. The COSO rules for smaller companies aren't even in exposure draft form yet, so our small company is being forced to comply with COSO for larger companies in 2005 only. It is not fair to smaller companies and doesn't make common sense from anyones perspective. The PCAOB needs to allow non-accelerated filers in 2004 fall under the definition of non-accelerated filer in 2005. We are really getting clobbered by the existing rules.

08/08/2005 21:39:10   Any non-operational focus by management of small companies has an opportunity cost. The benefits of SOX have not justified the diversion of resources to SOX compliance. Many small public companies are already burdoned by the existing compliance requirements.

08/09/2005 09:30:31   SOX has diverted attention of company management. Our knowledge is focused on small banks: Our registered company is the holding company of the bank. Banks have been highly regulated for decades. SOX added an additional regulator and additional burden. Unnecessary for banks.

08/09/2005 16:26:34   There is marginal benefit as we work on a risk basis and any finacial areas having significant risk of misstatement are well controlled. Therefore, we do not spend time on what we feel are risk areas given a somewhat finite amount of time.

08/09/2005 17:25:10   Yes, it has diverted attention as indicated in my above responses.

08/10/2005 09:04:41   because we are private, not applicable. our sense is that if we become public, this is exactly what will happen. we are a bank and heavily regulated. additional requirements of SOX will not add much benefit.

08/10/2005 13:44:39   Yes, particularly with smaller companies, dealing with SOX and keeping the process going takes a larger percentage of time. Time is not available to explore enhancing current operations and taking advantage of opportunites. Too much time is required for compliance.

08/10/2005 16:00:18   So far we have yet to see any benefits from SOX. We are spending far too much time at the executive level dealing with SOX and related SEC regulatory issues. We can't afford to hire more people to deal with it for us, so of course we're diverted!

08/10/2005 17:18:15   There has been a significant diversion from operations, with very little benefit. The company received a clean 404 opinion in 2004 without changing its internal controls. The company spent over 5000 hours documenting and testing an environment that it knew was already in-place and working effectively.

08/10/2005 22:09:27   The diversion on small company attention is huge. At the end of the day some executive is going to get hung for taking a legitimate business risk and believe me it's coming. There will be more lawyers getting rich, there will be a person found guilty of no wrong doing other the being an agressive CEO or President, yet some investor will get an ambulance chaser to ruin a person and possibly a company. In the meantime growth will slow and small companies will go private.

08/11/2005 08:35:22   Company Management has devoted a substantial share of time to the initial SOX compliance. Too much time has been wasted addressing minor items 'surfaced' by external auditors in their strict interpretation of SEC/PCOAB regulations.

08/11/2005 20:27:22   What benefits - there are no benefits, on the contrary there was as stated a diversion. I spent 29 yrs in public accounting and was a Sr Partner of an International Firm and know what good controls are. SOX based on PCAOB's has come up with their own view of accounting controls, which I view as ridiculous and could have taken a more practical approach to the real problem (ie.. Worldcom / Global Crossing etc...) these were not control failures.

08/12/2005 13:12:10   There is no question that it has caused a diversion away from running the company. We are all human and can only do so much during a workday. The additional attention we and our accountants are devoting to compliance is very burdensome and costly. Some of that time and that money could be spent on opportunity to make our bank grow and prosper for the benefit of our investors. The benefits are not justified in our company, because we already run a heavily regulated, well capitalized, well rated bank. The benefits of SOX are watered down by the regulatory oversight we already deal with, so we are just adding huge cost to redundant regulation.

08/12/2005 14:46:45   Not in our case. Management was already providing the same information in other forms. Internal Audit took on the monumental task of coordinating, converting and overseeing the implementation of required documentation requested by the external auditors.

08/12/2005 16:35:01   We see no benefit to SOX and, yes, implementing its requirements are a distraction that has hurt our business.


08/15/2005 13:08:27   Without doubt. Management is diverted and boards are diverted. Board seats are routinely filled now not by directors with broad business expertise but to meet the narrow definitions imposed by recent regulations. More than one board has complained that the financial expert "sits on his hands" when matters other than financial/audit are discussed.

08/15/2005 14:27:30   Absolutely yes and, in 2004-5 absolutely no. Cost (which has been astronomical) aside I hav personally watched Company CEOs and CFOs devote 80-90% of their time to SOX for weeks on end. One hopes that this was a transition issue but it certainly was painful.

08/15/2005 14:33:20   It has make the CFO people more focused on items that were working fine.

08/15/2005 15:10:05   Yes, some small companies should be also focused on the COSO objectives, risks and controls of "Operational Effectiveness & Efficiency" in addition to "integrity of financial reporting". Unfortunately companies perceive the extra cost of analysing all coso objectives as too expensive because they are used to thinking short term. The costs will ONLY be justified if they find a systematic/automated solution to make this sustainable vs. paying lip service to hundreds of irrelevant manual key controls and build it into the philosophy of the company not just a separate project.

08/15/2005 15:13:01   While I will admit that SOX has been a lever that we have used in certain instances in order to get our employees to follow proper procedures, these isolated benefits have in no way offset the opportunity costs associated with SOX.

08/15/2005 15:14:45   Yes. It is the full employment for auditors and attorneys act. And the audit firms are providing little or no guidance or council for management in matters of substance. Benefits of SOX justified..? Depends on where the "benefit" is thought to have been provided.

08/15/2005 16:33:43   We have spent thousands of hours of work in a company that has no bench strength. I was forced to hire outside consultants who knew little more than that anyone else, and spend one million dollars. The entire process took management away from what was really important- building a strong healthy viable company for the benefit of our shareholders. Employee morale plummeted during the whole process as well.

08/15/2005 16:41:14   Definitely resulted in a diversion of the attention of company management away from operational activities. NO - the benefits of SOX are not justified the diversion or opportunity cost. Management time is finite. And if too much time is now devoted to processes and c ontrols vs. running the business, the business suffers.

08/16/2005 09:51:21   Absolutely. Countless hours have been spent tring to figure out the proper level of sign offs and certifications, which while important would not be necessary if their was not an underlying quality business that needed to be "controlled".

08/16/2005 10:10:36   Yes, the opportunity cost for small companies is extremely high. Financial resources are spent on SOX compliance rather than marketing campaigns, sales personnel, or research and development. Financial management time is spent thinking internally, rather than about public markets, and enhancing the value of the company for stakeholders.

08/16/2005 10:13:05   Yes, SOX has resulted in a diversion of management away from operations. No, the benefits of SOX do not justify this diversion. For small companies, compliance with SOX is extremely difficult (to date, there is no distinction in the requirements of a tiny company like OP-TECH and a Fortune 500 company).

08/16/2005 10:21:17   Yes; the execution was flawed due to poor interpretation by the PCAOB and the audit firms. As a result, costs were too high to implement SOX.

08/16/2005 10:26:28   Yes, at least an opportunity cost but for dual listed companies also a real cost. Not justified unless you have a lot of US stockholders

08/16/2005 10:27:48   Yes...Yes....Yes! SOX is draining the lifeblood out of organizations. We are confident there will be positives from the exercise, but entities have to feel that there will be quantifiable results. To date no one sees those results. It is like we were given an antibotic for a disease that we didn't have any likelihood to contract. The serum is sure to make everyone ill.

08/16/2005 10:42:02   Absolutey! Management's attention has been drawn away from operational activities. For most companies, who felt that their system of formal and informal internal controls was adequate to produce accurate, timely financial statements, the benefits have not come close to justifying the cost. I know of no CFO's who believe that SOX has been worth the cost. We were not running blind before. We did not take our responsibilities to stakeholders lightly and did not sign off on our financials unsure of whether the numbers were right or not. From a financial statement accuracy standpoint, NOTHING HAS CHANGED!

08/16/2005 10:44:16   Yes, we have spent a singnificant amoutn to time on what feels like trivial things (the pendulum has swung too far) and this has been a distraction from our daily focus on business. Not, SOX benefits have not justified the opportunity cost. I don't think there has been payback for the investment of time and $$.

08/16/2005 10:45:16   Management has had no choice but to focus on SOX. SOX is not all bad, it has helped us to some extent; however, not per the cost and effort. It appears we are no longer in the "banking" business, but in the "documentation pleasing" business.

08/16/2005 11:18:54   Much time has had to be spent on Sox activities with no apparent benefits noted to date.

08/16/2005 11:41:07   Mgmt attention has been diverted. The benefits of SOX are small and have not offset this cost.

08/16/2005 11:52:16   There have been very few benefits if any. THe only thing that has happened is large sums of money going to accountants and lawyers. SOX is definately a diversion to the day to day running of the business. Management begins to make decisions based on regulations not business.

08/16/2005 12:14:10   As stated above this may be as critical or more important as the cost in hard dollars. For the small company the benefits are not where close to the cost, particualr the opportunity cost.

08/16/2005 12:15:34   SOX has resulted in a diversion of attention at our company with no added benefit (see question 3).

08/16/2005 12:40:54   No the benefits have no comparision to the costs. We are eliminating a whole class of small high tech companies and the infrastructure that used to support them, bankers, analysts etc. No thought has been given to an American economy that lacks the animal spirits and job creation of smaller tech entrepreneurs.

08/16/2005 12:42:56   My CFO has considered retiring early solely due to SOX. I daily receive complaints about arbitrary procedures imposed on our field staff by SOX contractors and our accountants. We are largely a fixed cost company, so there have been no benefits from the implementation of SOX, only burdens.

08/16/2005 13:04:14   The cost of my time, the fees charged by a SOX consultant and the added audit costs will far exceed any benefit we could possibly devive from improvements in internal controls.

08/16/2005 13:12:04   Opportunity cost is a real issue; up to 30% of key management time is devoted directly or indirectly to SOX or SOX inspired matters. That is time and resources that could be devoted to opportunities that would enhance shareholder value. The cost burden of (the present) SOX can in no way be justified.

08/16/2005 13:19:29   My company is a small bank (approximately $100 million in assets). We run our business based on a soud risk assessment model, and have always managed the use of our resources based on what was best for the company/our sharehodlers. While in the past we have been able to use our knowledge of our own company to best design our own internal controls, SOX essentially requires the use of a cookie-cuttter approach that fits large companies well, but forces too much use of our resources in some areas which leaves insufficient resources for us to put in other areas that we feel more deserving.

08/16/2005 13:20:23   It has only been a diversion of management because of inadequate planning and supervision of the SOX implementation. However it has been worth it as our Company is now better controlled, and it is much more widely understood accross the Company as to what is or is not acceptable behaviour.

08/16/2005 13:25:32   YES!! I have yet to see any benefits. Even in internal control, we have moved from meaningful evaluation to a "papering of transactions" mode.

08/16/2005 13:27:00   Yes. We spent a significant amount of time on SOX. There was tremendous pressure to ensure we met the standards in terms of documentation. We already had strong controls, but they were not documented to the extent required by SOX. As a result, many other corporate initiatives were delayed. As an example, we delayed the implementation of a new cost accounting system due to SOX. This will erode our competitiveness over time even further.

08/16/2005 13:30:33   I find very little benefit from SOX in a small company and SOX has clearly taken time away for our real business.

08/16/2005 14:08:05   Absolutely. SOX requirements have diverted management and resources away from cash generating activities to insuring 100% accuracy in financial statements. The emphasis is more on period accuracy than anything else. And, an element of precision has been introduced that is only as good as the estimates going into it.

08/16/2005 14:23:10   SOX has clearly diverted attention of company managment away from operational activities. As indicated above the opportunity cost of resources dedicated to increased documentation, consulting for controls systems, internal audit, external audit, management evaluations and oversight is much higher for US Public companies.

08/16/2005 14:44:16   The companies managemenet is distructed, reducing the number of cycles it has to deal with real market conditions. SOX did not add ANY value to the small companies.

08/16/2005 14:54:27   SOX has required significaqnt mangement time that otherwise would have gone to strategic planning and operational activities. The benefits of SOX have not justifed this cost.

08/16/2005 15:15:12   As a small company I have yet to be shown were SOX is of any benefit to the company or our investors. It has definitely diverted management attention away from taking care of business and increased cost. All of which is not good for small business.

08/16/2005 16:08:50   See questions 1 and 3. As CFO of a $17 million market cap company, approximately 50% of my time will be spent over the next 12 - 18 months dealing with SOX.

08/16/2005 16:09:47   Yes it has diverted attention away from productive activities. For a small company there are precious few benefits and disproportionally large expenses require for SOX compliance.

08/16/2005 16:16:04   Yes definitely. We have focused on alternative to avoid 404 compliance as the cost and resources are too material for our small Company. We should be focused more on how to grow our business and improve shareholder value.

08/16/2005 16:45:09   Absolutely taken the focus from creating to complying. We see no interest on the part of anyone, customers, suppliers, lenders and owners in the "preceived" benefits of SOX. They see no benefits in SOX. SOX is an attempt to fix a problem that pre-existing requirements were designed to be effective in fixing except they failed either from collusion, fraud or incompetence. SOX does not fix collusion, fraud or incompetence.

08/16/2005 18:21:27   The external cost is huge and the internal cost is much larger. Spending time signing off on checklists and specifically documenting procedures takes time which could have been spent on productive activities.

08/16/2005 18:35:41   Absolutely yes. The managers who must attend to various aspects of SOX404 compliance are the very managers who must carry the ball in expansions and attending to customer needs.

08/16/2005 19:18:56   Yes, SOX is a huge diversion of the attention of company management away from activities that focus on growing the company and increasing shareholder value. I do not believe that the benefits of SOX justify either the diversion or the opportunity costs. The resources, both financial and human, devoted to SOX, far outweigh the benefits of SOX for smaller companies. For example, the price of an audit for many small companies has increased in double and triple digit percentages to meet the audit requirements under SOX and the PCAOB (and the SEC). Many of those audits, in the past, were based on substantive tests of significant assets and liabilities - because in a small company environment, testing balances is very cost and audit effective. Under SOX (and the related PCAOB requirements), that kind of cost efficient and effective audit is gone. An integrated audit is now required and, as I said, the price of that integrated audit is doing nothing but going up. The theory was that the audit firm would test the controls, be able to rely on those controls so that the substantive testing would diminish resulting in very little, if any, increase in the cost of an audit. That thoery has proven to be flawed. With the price of the audit going up, the resource requirements at the company go up, diverting those scarce resources into an audit whose final result will not be viewed by the market as particularly different than any audit result of the past.

08/16/2005 21:29:07   Small companies with simple structures suffer from the cost and management attention needed for SOX compliance.

08/16/2005 21:40:38   Absolutely no justificaation for the diversion.

08/17/2005 06:57:10   Yes, it absolutely has imposed opportunity cost on management. Hiring additional resources dedicated to the project and making time to manage their progress and time are all costs to the company. Benefits not justified by cost. For the most part, the spirit of SOX is something that management can rally around, but the standards and level of detail of documentation and audit trail that it requires companies to keep does not always make sense.

08/17/2005 10:59:57   Absolutley SOX is a distraction to operations.

08/17/2005 12:28:22   Yes, no see no. 5 above

08/17/2005 12:36:00   Yes. As mentioned, I see little benefit to SOX. The hard costs, the diversion of management's attention, and the diversion of the attention of independent auditors and other financial advisors have far outweighed any benefit.

08/17/2005 12:48:33   NO.

08/17/2005 13:25:50   In small community banks/ bank holding companies like MVB Financial Corp., SOX is not justified. Before SOX, we were subject to examination by the Federal Deposit Insurance Corp., the WV Division of Banking as well as internal and external auditors.

08/17/2005 16:18:39   There has been a huge diversion of the attention of company management away from operational activities so that management could create documentation of procedures which the auditors insisted was required for SOX compliance. That was followed by the need to create, design, and implement new procedures which the auditors advised were required to provide adequate controls so as to comply with SOX. Yet additional time was required to be spent on testing / verification that the procedures were operating effectively. As a result, management was not able to focus sufficient time on the operations of the business.

08/17/2005 18:49:20   There is a greater question here - is it more important for senior management to spend time on operational activities at the expense of accurate financial reporting when the public's money is what is fueling the operations. Investors have a right to expect integrity and accurate financial reporting and to call attention of such matters a diversion from operational activities is what gets American companies in trouble in the first place. All too often private smaller companies are referred to as the owner's candy store - he/she can do almost whatever pleases them within the law (and sometimes outside of it). Are we trying to create a more controlled candy store by continuing to water down SOX for smaller companies or should the SEC be more concerned with protecting the rights of investors, regardless of how big or small the company is that they chose to invest in. I am concerned that the advisory committee is reacting too much to the criticism of cost and not enough to what the real focus should be, better financial reporting. Cost will come down over time but not by continually delaying the effective date. As long as the external auditors have to opine on any aspect of controls, they are not going to limit their work which is driving most of the cost.

08/17/2005 18:49:27   Yes - very significant opportunity cost. And no, the benefit to the company falls way short of both the direct cash cost imposed and the indirect opportunity cost imposed. Additionally, and this is a very important, if rather subtle point, SOX has created additional ways for contingency based law firms to "sue for settlement". Therefore every action we take today has to be evaluated, not against a simple standard of reasonableness, but against a much higher standard of "how do we avoid a contingency based law firm coming after us" even if we have done nothing wrong. We have avoided actions that coudl have been beneficial to the stockholders only because the perceived risk of being sued, should the action not work out as planned (an inevitable part of managing growth) was too great.

08/17/2005 19:31:08   SOX has resulted in a major distraction of management and board's attention. 25% of our our board meeting are now dealing with SOX compliance issues and concerns. Less time is spent strategizing how to grow the business and more time is spent discussing compliance.

08/17/2005 21:27:12   Somewhat.

08/17/2005 22:55:14   It has defintitely resulted in a diversion of management attention and resources. While we will realize benefits from the process, the costs far outweigh the benfits.

08/18/2005 08:03:31   Yes, it is creating paper instead of profits for the companies.

08/18/2005 14:30:38   Yes. No. SOX is focused too much on the detail controls when problems generally only occur when the Board of Directors or the Audit and other Board committees do not adequately perform their duties.

08/18/2005 15:26:25   There is definitely a diversion and the benefits have not outweighed the costs. In a small company, there is often a very small accounting team and the significant time spent on compliance detracts from the time spent on analysis and improvement initiatives.

08/19/2005 02:56:12   SOX compliance has consumed a great deal of management's time and attention. Many, if not most, system and finance projects were deferred, even those that would help develop the business. At my employer, over 80 people were diverted, either full or part time, to SOX efforts. $3.5 million was expended using external consultants, Over 9,000 controls were documented and only 11 very minor deficiencies were discovered. This was a very high cost when one considers that this represents 75% of all the finance employees in the company and that those people could have been doing work to grow the business, implement new systems to better manage the business, conduct operational audits and address issues that were important for the business. While it is nice to try to justify SOX by saying that it led to re-engineering and better documentation, for companies such as ourselves, it simply increased our costs, diverted valuable resources, burned out key people and didn't change any of our work flows or activities. Much of the work and cost was driven by consultants and auditors that were much to anxious to bill more hours by constantly rewriting and reviewing documentation and by grossly overauditing the company and then doing financial audits on the same accounts at the same detail with no thought to integration. The lack of implementation guidance by the SEC and PCAOB was a significant contributor to the cost of compliance. In retrospect, the objectives of SOX were good, but the blind approach to addressing the objectives were frustrating.

08/19/2005 11:44:44   It most certainly has diverted time and attention away from operations. We expect to see improvements in operations and internal controls, but not enough to offset the cost in productive time lost.

08/19/2005 12:28:03   Absolutely. It is to early to tell if the benefits are justified.

08/19/2005 13:49:01   The existence of SOX has been an added consumer of the attention of company management and in a number of cases has required that companies employ individuals specifically to oversee the effort required to meet SOX compliance. The full attention of the added person is devoted to SOX whereas only a portion of the senior management´s attention is so focused. The SOX requirements have, however, consumed an inordinate amount of funds that could have otherwise been earmarked for Research which could have resulted in expanded employment and company growth. As the efforts to become compliant with SOX progressed in my company there were many changes made to the way processes were performed. Did these changes improve efficiency? Yes. Was there additional cost to these improvements? Typically only minor cost. Did the addition of these efficiencies equal or exceed the value that could have been derived if the funds had been invested in further growth of the company? Though it is difficult to determine whether or not the benefit exceeds the cost, it is felt that some of the changes made during the SOX documentation process may have resulted in enough labor savings to cause the delay in hiring additional staff. The value of the derived benefit was very minor. Yes, documentation and validation of transactions was improved and other good controls were added, but as a small company it is not atypical to have a ‘finger on the pulse´ that would uncover any malfeasance. As a small company with desires of becoming a larger company it is imperative that funds be reinvested in the Company to provide for future growth; growth yields higher employment and higher employment yields a stronger economy.

08/19/2005 14:40:28   Definitely. As a SOX consultant for both large and smaller public companies, I have witnessed a constant struggle among my client's management team to continue to operate the business and meet shareholder's expectations, while using more time, effort, money, etc. towards compliance. There are always trade-offs.

08/19/2005 14:50:07   The cost of SOX, both in real terms and in management attention, is unreasonable and unjustifiable at least for the community banking sector. As it is, our regulator assessments and outside auditor expenses are significant even without factoring in the added cost of SOX 404 compliance.

08/19/2005 17:03:28   It has resulted in a diversion away from operational activities. A less broad version of SOX could provide the regulatory goal, while allowing management to spend less time and money on it.

08/21/2005 03:34:34   I believe that SOX does divert the management's attention from important operational activities. As mentioned below, SOX is "too much of a good thing", and became an encumbersome and impractical. While some measures should have been taken, it would have been much more effective just to punish severely the guilty managers, and let managements take the precautions they see fit in order not to go to the dangerous zones.

08/21/2005 04:46:26   Certainly and this is the main damage of SOX.

08/21/2005 22:19:50   I think in some ways SOX has provided benefits that justify the cost. However, the cost of having an external audit and the lack of consultation that public companies receive from their external auditors has become a diversion.

08/22/2005 14:21:23   YES BIG TIME! I do not believe SOX has helped small companies at all. As previously said, a crook is a crook and they will get around the regs. It haw also imposed a greater financial burden by bringing in more people

08/22/2005 15:20:23   In our company, most of the diversion has been in the accounting department. We have not required significant attention from operational resources. However, this has caused us to hire a person to manage SOX activities, which is significant when you have a workforce of only 25 people.

08/22/2005 15:47:02   Yes. No.

08/22/2005 15:47:34   Yes, SOX has diverted the attention of management. In smaller companies top management must deal with SOX directly. Larger companies can assign competent staff to address the requirements of SOX. With smaller companies the only ones competent to deal with the complexities of SOX is the senior management.

08/22/2005 17:54:28   Since much of the SOX act is devoted to penalties, sanctions, and punishment for management, then managers must divert attention to SOX. However, there is very little payoff for this shift. Our company had very sophisticated systems before, so we gain almost nothing.

08/22/2005 17:56:59   It has resulted in a diversion. And we do not see any benefits to the shareholders, the customers, or employees.

08/22/2005 19:27:18   A certain portion of SOX is beneficial, but not to the degree of the time commitment. It's good to review the controls, but it has had no effect on our statements published.

08/22/2005 20:10:17   SOX has not caused a diversion, it has increased our workload and hours devoted to our jobs. We see no real benefit to SOX other than to better the financial position of the accounting profession. The scams by Enron and other large companies will no doubt happen again. We see more chance of error and problems with too many accountants in the mix. Our company has 6 different accounts as we have a foreign branch. For that office we have an in house CFO, an accountant and an auditing firm. For our USA operations we have a CPA firm that prepares financial statements, the auditing firm and the concurring reviewer. That totals 6 accounting professionals. When they argue over semantics in a filing such as using the word "acretes" instead of "matures" I fail to find benefit to the company or the public. There are too many hands in the pie and the outcome does not necessarily benefit the public. The time required by management does not divert us from our business duties, we just spend more time on none issues such as accountings fighting over words and round up one dollar or down one dollar. Does this benefit or protect the public? Not one bit.

08/23/2005 00:42:38   yes, see above not as currently implemented for small companies.

08/23/2005 07:47:56   SOX have slight improvment in transparency but in many cases the managment try to cover thier them instead of taking the right business decisions

08/23/2005 15:56:30   As stated earlier, attention has definitely shifted away from more important business managment issues. The benefits do NOT justify the diversion.

08/23/2005 16:49:34   Yes, especially for the smaller companies such as ours that don't have the manpower to do the administrative paperwork.

08/23/2005 18:10:00   Without a doubt. We have SEVERAL of our senior managers working 50-70% on SOX since Dec '04.

08/23/2005 21:11:03   The diversion of management resources for smaller companies away from running the business and towards SOX compliance is huge. For those companies that have basic accounting controls and some general computer controls in place the work of creating more controls, investing significant time in documenting every process and procedure, testing all the activities and then being subjected to the variable whims of the external auditor is a dramatic impact. It is not unusual to see 20-30% of senior managers time (particularly CFO/CEO/COO) taken up with SOX compliance. It is also not uncommon to see organizations freeze all discretionary development and product innovation in order to free people and capital resrouces for compliance activities.

08/24/2005 08:50:18   Definitely. It has hurt our focus on our operations in that we all have to work (an estimated) 10 more hours a week to do our jobs while we try to implement SOX.

08/24/2005 10:14:02   404 will be a major distraction for management and a cost for the company.

08/24/2005 11:28:21   SOX has clearly taken management time away from operational activities. In smaller businesses such as ourselves, the basic tenets of internal controls provide a net benefit to the business, as we look to becoming fully compliant, the costs outweigh the benefits.

08/24/2005 12:24:07   There has been a significant diversion of time and money toward sox compliance. Every dollar and minute is opportunity cost taken from analysis of the business operations and strategic direction of the company; it is a zero sum game. The benefits have not justified any material amount of the cost.

08/24/2005 14:30:13   Yes, it has resulted in a diversion of attention away from operational activities. There is a loss of focus on the business and its costly to the company. Its too early to tell if it is justified or not.

08/24/2005 16:19:27   Yes. I have answered above in many of the replies.Good audit firms in the US do a great job at checking our records. Lots of work goes into these filings. Instead of killing companies with compliance we need these firms to send in more intelligent people that understand our business.

08/24/2005 16:26:56   Yes –smaller companies typically have leaner management teams and smaller finance and internal audit departments than larger companies, so SOX draws a greater percentage of time away from management´s focus on the business compared to a larger company. We do not believe the benefits of SOX justify the diversion of a relatively greater amount of management time.

08/24/2005 16:51:40   Yes, and No. A small company also has a small staff. The financial personel fill many duties. They cannot spend the time to be fully aware of the accounting rules which are imposed by the act. The time they spend detracts from the time that they can spend on what were previously duties for the Company

08/24/2005 16:54:47   Absolutely, attention has gone to SOX instead of setting strategic course and direction. Cost exceeds benefits.

08/24/2005 20:16:09   We began working on SOX in 2004 (we are currently a non-accelerated filer). We feel it will take a conscerted effort on the part of our staff to complete the SOX 404 process by the end of 2006. We do not have enough staff for such a project but are having trouble finding qualified staff to hire. We are competing with the large companies for this type of expertise but we can't afford the salaries being offered by the larger companies. We are having to rely on outside vendors and that is VERY expensive. Vendors first musst spend time and money getting to know your business and processes before they can even begin to docuemnt controls let alone test! Our entire operational and senior management team is focused on the 404 project which has diverted us away the business of banking. An extension of the deadline would certainly be welcome as we are trying to complete 404 with current staff and one outside consultant. We are close to the 75MM in public float so without a change in that measurement we would more that likely have to be in compliance by 2006. We need better definiitons of small, medium and large companies in order to have some relief from the heavy burden of regulatory reporting and compliance.

08/25/2005 13:39:06   The benefits have not justified the diversion of activity away from our core business. It will not do anything to reduce fraud if the individual has intent to do so.

08/25/2005 15:23:41   Yes, SOX is most definately an opportunity cost. The benefits do not outweigh the cost of the project.

08/25/2005 16:04:36   Absolutely a diversion for many companies. Many of our clients who leveraged our SOXlite methodology were able to focus on operational issues while complying.

08/25/2005 16:26:29   Yes,there has been a diversion of attention of company management away from operational activities. While there are benefits to SOX, the costs have outweighed the benefits.

08/25/2005 17:02:43   SOX has diverted a significant amount of the financial management time at our company away from managing the operations. The CFO is less involved in strategic leadership due to governance duties. The perceived benefits of SOX are not justified for smaller entities in my opinion.

08/26/2005 12:41:42   The time to implement 404 will be a significant diversion of management attention from real opportunities. The benefits of implementing SOX will be small.

08/26/2005 13:07:22   It has been a great diversion for management due to the time involved to acquire knowledge about the requiremnts and to implement the changes required. It has certainly increased the time and money spent with CPAs and counsel. At our company we strongly beleive the benefits have not justified the diversion and cost.

08/26/2005 15:10:01   Yes. No. See previous answers.

08/26/2005 15:31:29   If utilized properly, relevant controls in key areas can result in increased efficiencies and ultimately result in cost savings.

08/26/2005 16:22:08   Yes. I believe SOX is a good exercise to go through from a controls standpoint, but it does take away from operational activities.

08/26/2005 17:28:04   Yes, smaller companies have limited staff and SOX cmpliance requires management time resulting in lost opportunities. I do not believe the benefits justify the burden on management.

08/26/2005 17:46:13   Yes, management needs to pay lots of attention to SOX-related issues instead of focusing on the business. In many cases the implementation is far too "big" for the company, yet you have to go through the motions and incur the expenses. There are no benefits for SOX when it comes to small companies - just terrible burden, cost, diversion and opportunity cost.

08/26/2005 19:53:54   Absolutely as management of small companies, already wearing many hats and carrying many responsibilities, must now contend with a mountian of new SOX regulations. The benefit does not come close to the burden being imposed.

08/27/2005 11:21:03   Somewhat. The biggest pain seems to be the additional attention needed because the auditors aren't being as helpful in solving reporting problems. The most frequent solution is that another outside accountant is hired to 'dress up' the financials before the auditors get them each quarter. However, the quality of reporting isn't improved - just made more expensive. The 2nd outside accountant has little or no SEC reporting experience, so the auditors must still make all determinations for complex rules (like equity issued as compensation, revenue recognition, impairments, etc.).

08/28/2005 17:59:58   While I understand the rationale behind SOX it's application is penalizing companies who have done nothing wrong. Any time management spends discussing SOX is time not spent on implementing our growth strategies. And the cost of SOX limits our ability to further invest in our business or share profits with our shareholders.

08/28/2005 23:37:43   Absolutely. I have seen firsthand a firm which employed me as an executive officer divert funding of new products to personnel costs for compliance activities.

08/29/2005 07:07:37   Absolutely. The benefits of SOX didn't justify the burdens.

08/29/2005 10:21:15   It has diverted the attention of management in our company. With a small company, upper management is heavily involved in all day-to-day activities of the company. With SOX 404 being such a monumental task, particularly in a small company environment with few internal employees, it necessitates management working on it rather than focusing on growing the business. Given this reality, the benefits of SOX have not justified the diversion or the opportunity cost.

08/29/2005 10:21:25   It has diverted the attention of management in our company. With a small company, upper management is heavily involved in all day-to-day activities of the company. With SOX 404 being such a monumental task, particularly in a small company environment with few internal employees, it necessitates management working on it rather than focusing on growing the business. Given this reality, the benefits of SOX have not justified the diversion or the opportunity cost.

08/29/2005 11:21:29   Yes, management of small companies tends to know what is going on throughout its organization on a day to day basis better than large companies. But here we are having to docuement what we already know instead of finding new ways to better serve the customer. The costs of Sox outweighs the benefits at smaller companies because there are very few resources to utilize and if those resources are used to document controls, there is very little resources left to come up with new ideas.

08/29/2005 14:18:47   I believe that SOX may have diverted the attention of some managements from operational activities - but in those companies where it has happened, the internal controls may have been in such a state that this was a good thing. That justifies the diversion, in my view.

08/29/2005 14:53:30   Yes. If so, have the benefits of SOX justified the diversion or opportunity cost? No. Please explain. SOX has diverted the attention of management away from operational activities, and it has imposed opportunity costs on management. Management of small companies have and will spend hundreds and in some cases thousands of hours complying with SOX. CFOs of small public companies have and will spend as much as 25% of their time with SOX compliance. This is time not spent on other issues more important to the company and its shareholders´ welfare. This is in addition to the estimated $1 million that will be spent for outside consulting services and additional audit fees by a small public company to comply.

08/29/2005 15:31:21   Without doubt, management is more focused on regulatory compliance issues than on profit-making operational activities. The SOX process may eventually result in the identification of more cost efficient methods of operation, but the "cloud of regulation" will always be there.

08/29/2005 16:10:53   Yes----and it will continue to do so. Directors are now asking themselves the question---Why should I take the risk on being on the Board of a public company? As mentioned previously our lowest bid on 404c compliance is $250,000 in the first year alone, fully 11.4% of our 2004 earnings and then $75,000 per year after that!

08/29/2005 16:20:53   Yes, SOX has resulted in diverting management's attention away from operations. No, the benefits do not offset the opportunity cost. As a federally regulated financial institution, we believe we adher to many of the provisions of SOX but unfortunately we now have to change how we document them.

08/29/2005 17:09:27   Absolutely, the diversion of corporate resources to include the redeployment of senior and middle management cannot be cost justified or recovered. The benefits cannot justify the opportunity cost of time away from other duties - especially in the highly regulated banking industry.

08/29/2005 17:12:26   Yes there has been some management diversion and as I said I beleive there is some overkill currently, particularly in the already highly regulated banking industry.

08/29/2005 17:12:43   The cost of SOX for our company is projected to be approximatley $2.8 million this year. This translates into an EPS burden of approximately $0.20 per share, in a company that earned $0.86 per share in the prior year.

08/29/2005 17:36:32   Absolutely. The corporate governance requirements are virtually a full time job for the smaller company management.

08/29/2005 19:02:32   As CFO with a small staff (3 people) I spend an inordinate amount of time dealing with SEC filings and press releases. I spend less time with operations as time goes on. There is no benefit to our investors. Our reports contain a very clear picture of our business.

08/29/2005 19:05:24   The opportunity costs imposed by the SOX regulatory overkill are as significant as the cash costs. For example, during early 2004 we completed a significant acquisition and had in place a plan to integrate certain financial, technology, and business processes. Due to the demands that SOX placed on our finance and IT groups, these integration plans were delayed for a year. The lack of integration increased our operational costs, decreased our efficiency, and, because the processes remained decentralized, actually increased the risk of transactional processing error.

08/29/2005 21:00:01   SOX has definitely taken smaller public company management away from operational functions. For example, my current company (biotech, no products, 165 employees) had an excellent internal control system; however, the cost to document and test and monitor is costing as much, actually slightly more, than my previous company that was international, had $250m in revenues and ~1,500 employees. At a small biotech company there is far less "SOX" risk than at a larger company - the real risk is in product development and the ability to raise capital to fund such development. In addition, the diversion of management away from operations is far greater at a smaller company due to the simple fact that there are fewer employees to handle the administration.

08/29/2005 22:40:58   SOX has cost small companies both time and money. The costs versus benefit relationship is not justified for SOX compliance. No small company could justify the costs involved for the small benefit obtained from SOX compliance. For example, some small companies are going to spend 2% of their REVENUES in SOX compliance costs, for both internal and external costs. Many CFOs cannot focus on business operations with all the additional compliance requirements of SOX.

08/30/2005 15:04:16   SOX and the general SEC regulatory climate foster redundancy, repetitiveness, and excessive disclosure - with inconsistent rules. Compliance with such rules demands excessive time and effort by senior management without any value. What's most frustrating is that the required "rules" and disclosures do not help the investors in understanding the reporting disclosures.

08/30/2005 15:07:00   Absolutely SOX has resulted in a diverson by management away from the operational activities. The lost opportunity cost is greater on smaller entities because of the smaller number of managment personnel and the devotion of time to the SOX compliance activities.

08/30/2005 16:27:18   Yes, as a smaller company we do not have the manpower to assign a "team" to SOX. Therefore, valuable management time is taken away from the day to day activates of competing against large international companies in order to comply with regulations.

08/30/2005 17:08:46   SOX compliance has represented a significant diversion of the attention of the Company's financial management personnel (Chief Financial Officer, Corporate Controller, Division Controllers) away from operational activities. The Company has had to retain temporary employees to augment its financial staff in order to free up the Division Controllers' time to work on SOX. Smaller public companies often do not have internal audit functions this put the audit burden on the Corporate Controller and Chief Financial Officer. The benefits of SOX are not readily measurable or quantifiable, consequently it is not clear whether the benefits of SOX have justified the diversion or opportunity cost.

08/30/2005 17:23:36   Management's first priority will always be operations. There is certainly an opportunity cost of time. With a staff of 40, management is under tremondous pressure to complete the SOX regulations with the same amount of staff as a private company.

08/30/2005 18:26:14   Resources have been so consumed by SOX that attention to operational activities has been compromised. The focus for the limited resources available to small companies has turned to addressing compliance risk rather than strategic and operational concerns. The incremental benefit of redundantly documenting an established adequate internal control structure is greatly overshadowed by the tremendous cost of implementation.

08/30/2005 18:48:02   Yes, SOX takes up too much of a small company's management's time. No, the benefits do not outweigh the outlay of cash and time. Small companies are more risky investments even with the best management and planning. Therefore, hopefully the people investing in them are the more sophisticated types who will cast a sharper eye on the finances, ask more pertinent questions, and spot any discrepancies.

08/30/2005 18:51:48   SOX has definitely resulted in a diversion of our management´s attention away from the company´s operations. Several of us have been to seminars, each of us are required to document processes. Because of our size, we did not have an internal auditor. Now we will all be performing extensive testing and reviews of other´s work. We don´t believe that the benefits of this justify the resources (in terms of time or funds) spent.

08/30/2005 19:47:16   Yes, SOX has resulted in a diversion of management resources from operating the business. SOX does not prevent fraud, so it is hard to see who benefits from it, other than auditors and attorneys who are charging significantly higher fees.

08/30/2005 21:07:56   Yes. The benefits of SOX has not justified the diversion as the policies and procedures are already in place in most cases whithout the additional cost of compliance.

08/30/2005 21:39:41   Yes, SOX has resulted in a dramatic and substantial diversion of management´s attention from the Company´s core operating activities. We do not believe that any of the potential benefits of SOX justify such diversion and high costs.

08/30/2005 23:57:28   SOX resulted in adiversion of the attention of management away form operational activities. Managements are request to attend periodical meeting and provide input on SOX.20%-30% of time was allocated to SOX.

08/31/2005 08:31:59   SOX has diverted the attention and resources away from operational activities. The benefits of SOX do not justify the internal and external resources devoted to it.

08/31/2005 09:09:25   Absolutely--management has to devote way too much time to paperwork and procedures to satisfy SOX, but that does nothing to enhance shareholder value.

08/31/2005 10:19:14   YES, there is a diversion or opportunity cost associated with SOX for small companies. It appears the actions of a few scoundrels like, Ken Lay, Bernie Ebbers, Scrushy, Kozlowski, etc. create a diversion and opportunity cost and resource drain for all SEC registrants. I believe this opprotunity cost and resource drain is not necessary for companies that are not publicly traded on the exchanges or over-the-counter.

08/31/2005 10:21:37   Senior management, in particular the CFO and accounting management, devote time to compliance that could be better spent developing the company.

08/31/2005 14:00:12   I believe Section 404 compliance efforts have diverted substantial executive resources, especially financial and IT, away from operational opportunities. These costs far outweigh any benefit.

08/31/2005 14:00:16   Absolutely! Management is spending more time documenting and testing and assessing how they're managing instead of actually managing! Stockholders should be screaming that SOX is accomplishing the exact opposite of what was intended. Companies are forced to spend more money to manage a conceptualy process at the neglect of the company itself!

08/31/2005 14:12:37   As noted previously, compliance with the requirements of SOX has definitely occupied an increasingly larger proportion of company management´s time. The result for smaller companies (that cannot add headcount to deal with these requirements because of resource constraints) has been a diversion of attention by company CFO´s and other senior executives away from operational activities. While most of these companies have recognized some benefits from the increased scrutiny of their internal controls, these benefits have been insignificant when compared to the substantial costs of compliance.

08/31/2005 14:23:48   Yes. no justification possible for the cost associated with SOX

08/31/2005 14:25:37   SOX has resulted in less time with my customer, less business development, less loan funds available for my communities, less dividend for my shareholders and a result of directors not willing to serve on our board.

08/31/2005 14:32:46   In our case, it has definitely resulted in a diversion of management's time and resources. We are a very small company with hands-on management at every level. The likelihood of misconduct, collusion or fraud going undetected is very, very remote.

08/31/2005 15:19:27   Absolutely. I don't believe that the benefits have been justified. There have certainly been benefits and the process makes sense, but the cost of compliance still far outweighs any benefits.

08/31/2005 16:05:33   I believe it definitely has a diversion of the attention of a companies management from operational activities. It is very time consuming and takes finanicial resourses to stay in compliance. In smaller companies such as ours additional staff or outside consultants need to be hired to stay in compliance.

08/31/2005 16:13:45   SOX has diverted the attention of management away from operation activites in smaller companies. The benefits of SOX has not justified the diversion or opportunity cost. Laws and regulations effect prior to SOX were adequate, they were not enforced.

08/31/2005 16:16:33   6. For the first year of implementation, significant resources were diverted away from operational activities to SOX compliance. Our company´s corporate operating expenses increased approximately 10% during the first year. However, the learning curve for this type of implementation is extremely steep, and most companies should see a significant decrease in resources devoted to SOX in subsequent years. Most companies have been able to incorporate SOX compliance into normal operating activities. Closing periods now include SOX compliance as part of the normal audit and review process. As with many investments, companies must understand the importance of new systems, whether it´s an ERP system or a SOX compliance program. Time will help determine whether this sacrifice is worth the expected long-term gain.

08/31/2005 16:29:59   yes, again smaller companies have smaller staffs, thus the added requirements of SOX places a burden on that staff which can not be obsorbed thus that burden goes to management and management must spent the time and resources necessary to solve those problems. In smaller companies there was already the hands on management, SOX just added more reports, more reporting. We have not sold more , made more, caught any law breaker or come up with better ways of doing any of those thru our SOX compliance.

08/31/2005 17:16:33   Yes. For a while their our Board was total focused on history and compliance. We were immersed in compliance. We realized that we needed to spend more time on strategic issues that SOX compliance was taking us away from. Sox doesn't justify a diversion of that magnitude.

08/31/2005 17:57:10   Yes due to the significant time involved and the benefit does not justify the diversion.

08/31/2005 18:22:30   To the extent management has focused on SOX they have not focused on other matters. We believe that top management time was largely a first year matter and that the ongoing maintenance of good control systems can be largely accomplished at the middle management level. However, we cannot conclude that the diversion of management attention away from running the business, or devoting the costs necessary to comply with 404, provides benefits that justify the diversion of attention and cost.

08/31/2005 18:23:08   Yes, attention has been diverted from operational activities – both accounting and IT have spent more time “showing” that procedures are done vs. doing their jobs and working with the business. Internal Audit has also been largely re-directed to SOX. No, the benefits of SOX have not justified the diversion; for the most part, the impacts of SOX have been form over substance.

08/31/2005 19:16:05   6. In our case, SOX is addressing a problem that didn´t exist due to our smaller and simpler corporate structure. Alternative controls are forcing our management to move their time further and further down into the everyday operational processes of the company. I cannot remember a Board meeting in the last two and one half years that hasn´t devoted more than 50 percent of its time to dealing with SOX issues. The cost of having a Board has risen dramatically due to the time requirements of SOX and recruiting new members to our Board has become all but impossible. Again for our company, a 10 percent error in reported income would be approximately $200,000, but our compliance costs may well exceed this amount on an annual basis, so we would not consider the cost worth the benefit.

08/31/2005 20:55:07   As SOX gets fully implemented it will surely take considerable time and resources away from running the day to day business. It has been proven many times over that when a small company lacks focus it will fail as a going concern. Management needs to focus on growing the business profitably to create value for employees and shareholders alike.

09/01/2005 00:55:31   As an acce;lerated filer, 2004 implementation of SOX 404 did divert management's attention from other operational mattres. However, 2005 has thus far been more even keel

09/01/2005 11:40:19   Yes, management has been diverted and no, I do not believe the benefits of SOX is greater.

09/01/2005 14:30:54   The amount of time management now spends on what might be considered trivial matters is far in excess of that required before the imposition of SOX. One must remember that smaller companies cannot afford the costs of more employees and legal fees to guarantee compliance with SOX. Managers who could be paying attention to growing the business must spend additional time and money on compliance or face the possibility of draconian penalties for some small oversight

09/01/2005 17:12:34   The benefits of SOX do not warrant the diversion of management time. As CFO and one of the top three officers of the company I am spending a significant part of my time on SOX now rather than operational items like budgets and or even spending time traveling to see investors.

09/04/2005 07:42:16   Yes. It is too early to say if the cost benefits worth this sox compliant effort with small companies.

All Survey
Main Survey



Modified: 10/13/2005