When the Sarbanes-Oxley Act (SOX) was ratified in 2002, requiring strict financial reporting standards for publicly owned companies, the law was regarded by many in the business community as an administrative burden. In the eight years since SOX has been in place, however, the reporting rules have helped some companies drive continuous improvement efforts, according to a recent survey by the Protiviti consulting firm.

As part of the 2010 Sarbanes-Oxley Compliance Survey, released in June 2010, Protiviti contacted more than 400 executives of publicly traded firms across a range of more than 16 industries. The study found that by requiring that internal financial controls be instituted at public companies, SOX has forced many companies to re-examine their processes to make them more efficient.

“Nearly two-thirds of all responses said their organizations are leveraging their current Sarbanes-Oxley compliance efforts to drive continuous improvement of business processes that effect financial reporting,” the report stated. “Many companies have recognized the value that comes with establishing a detailed process flow documentation and analysis format approach. They have leveraged it for other business processes to flush out inefficiencies and redundancies.”

Sixty-eight percent of respondents from large organizations – those with annual revenues of $10 billion or greater – reported their companies were leveraging Sarbanes-Oxley to drive continuous improvement efforts, in contrast to 48 percent of respondents from the small companies surveyed – with annual revenues of less than $100 million.

More than half (54 percent) said that the primary benefit their company expects to receive through Sarbanes-Oxley compliance in the coming fiscal year is an “enhanced understanding of control design and control operating effectiveness.”

The survey also found that 63 percent of respondents said expenditures on SOX requirements fell by 30 percent or more in the most recent fiscal year compared to their initial year of compliance.

“By linking all controls to the objectives of efficiency, effectiveness or securing investment, the ongoing costs [of SOX compliance] became ordinary costs of doing business,” said the director of a consulting services firm that took part in the survey. “Our initial costs to respond to SOX are just a blip that we used to put us on the course to our current definition of and approach to controls.”