Soft Benefits

By Larry Dignan  |  Posted 2003-10-01 Print this article Print

Rich de Moll, vice president of finance and employee transformation at Cap Gemini Ernst & Young, says many of the Sarbanes-Oxley returns will be soft benefits, items that cant be quantitatively measured. "Sarbanes will provide better information to decision makers," such as real-time statistics on sales and inventory, says de Moll. "But thats harder to measure."

Hagerty says companies using Sarbanes-Oxley to refine processes and to simplify infrastructure through hardware and software consolidation should be able to produce a return.

For instance, standardizing business processes worldwide could allow a company to cut workers and share services across divisions for a savings of as much as 30%, according to AMR.

Perhaps the best way to determine the returns for Sarbanes-Oxley would be not to comply, a choice no company would advertise. Under this scenario, a company could refuse to certify its results and play chicken with the SEC. Lack of certification wouldnt necessarily indicate fraud.

Although executives say they wont be surprised if some companies fail to comply, no one is volunteering to be a test case. How do you put a value on your corporate reputation? Hypothetically there could be a better return for not complying, but a company would likely be delisted from the stock markets, raising its cost of capital. WorldCom lost more than $20 billion of market value over what later became $9 billion of financial fraud. A willfully noncompliant company also is likely to be hit with shareholder lawsuits and other litigation expenses.

PricewaterhouseCoopers partner Richard Anderson says that electing not to comply could be treacherous. That would put a company "in uncharted waters with what the SEC will do and how they will do it."

Next page: Moving Towards ROI.

Business Editor
Larry formerly served as the East Coast news editor and Finance Editor at CNET Prior to that, he was editor of Ziff Davis Inter@ctive Investor, which was, according to Barron's, a Top-10 financial site in the late 1990s. Larry has covered the technology and financial services industry since 1995, publishing articles in, Inter@ctive Week, The New York Times, and Financial Planning magazine. He's a graduate of the Columbia School of Journalism.

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