Private Firms Responding To Sarbanes-Oxley

Even though law does not require them to, many private firms have heeded lessons learned from their public brethren and are reforming accounting procedures. According to a survey of 1,359 CFOs from a "stratified random sample of U.S. private companies with more than 20 employees," 48% of the leaders have revamped financial procedures in response to the Sarbanes-Oxley Act of 2002. (Congress passed the act in response to egregious financial conduct on the part of a handful of large, public companies.) Robert Half Management Resources, a professional services firm for executives in accounting and finance, conducted the research. Of those private companies making changes, CFOs most frequently made changes in the payroll/benefits area (44%). Other areas where change was reported: expenditure/purchasing (37%); accounts receivable/sales (31%); capital assets (31%); conversion/inventory (31%); credit management/collections (29%); disbursements (25%); financial close (22%); other (3%). ". . .nonpublic companies are reviewing wages, salary and bonuses, as well as medical and other employee benefits such as phantom stock options, as though they were publicly traded," says Paul McDonald, executive director of Robert Half Management Resources.