June 21, 2004 -- The Sarbanes-Oxley corporate reform laws that have forced public companies to take a long, hard look at their financial and accounting practices have had a different effect on private companies. A growing number of them are voluntarily imposing new regulations, a new study shows.
Nearly half of 1,359 chief financial officers of private companies who responded to a Robert Half Management Resources survey said their companies had made changes to their financial accounting and reporting practices as a result of new regulations such as Sarbanes-Oxley. Fifty-two percent of the CFOs said they haven't made any changes, according to the accounting and finance professionals recruiter.
The most often addressed area of reform was compensation, with 44 percent of those making changes citing it. Thirty-seven percent of the reformers said they had altered expenditure and purchasing reporting. Other targeted areas were accounts receivable, sales, capital assets, inventory, collections and disbursements reporting.
"Even though private businesses are not legally required to comply with regulations such as Sarbanes-Oxley, many firms are looking at their high-exposure areas with increased scrutiny," said Paul McDonald, director of Robert Half. "Companies of all sizes are taking measures to prevent costly errors or potential fraud across all financial functions."
The findings are in line with a similar survey conducted by the law firm Foley & Lardner LLP in May. Sixty percent of the much smaller pool of 30 companies indicated they had either self-imposed some corporate governance reforms or done so at the urging of board members or auditors.