Is the Cost of Regulation Too High?

April 15, 2005
A recent Manufacturers Alliance/MAPI survey of 60 senior financial officers of member firms found that the average cost of compliance to Sarbanes-Oxley represented 5.9% of net income before taxes. This expense has Thomas J. Duesterberg, CEO of the ...

A recent Manufacturers Alliance/MAPI survey of 60 senior financial officers of member firms found that the average cost of compliance to Sarbanes-Oxley represented 5.9% of net income before taxes.

This expense has Thomas J. Duesterberg, CEO of the Manufacturers Alliance/MAPI, concerned. In testimony before the U.S. House of Representatives on April 12, he explained that regulation plays a "crucially important" role in a highly competitive environment for manufacturers and that "we [the United States] must do a better job of balancing the risks and rewards of regulation."

Duesterberg pointed out that manufacturers are subject to adverse trends such as --falling profits, a deteriorating trade balance in high-technology products, and a downturn in new plant formation and hiring -- that amplify existing cost pressures. While regulatory compliance adds yet another cost pressure, he offers suggestions on how to balance the goals of regulations and its costs.

For a transcript of the testimony visit http://www.mapi.net/filepost/DuesterbergStatementApril12.pdf

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