Now that most retail companies have had two full years of experience in implementing the provisions of the Sarbanes-Oxley Act, many are seeking opportunities to not only reduce compliance costs, but also to streamline and leverage these efforts to reduce overall operating costs. In other words, these compliance efforts can be a stepping stone to creating efficiencies through ongoing process evaluations and continuous improvements.
With this in mind, Protiviti surveyed a sample of publicly-traded retail companies to obtain industry-specific information regarding their current Section 404 initiatives and efforts to transform their compliance initiatives from a project into a process.
Survey findings include:
- Approximately 84 percent of respondents experienced a decrease of at least 10 percent in spend for Sarbanes-Oxley compliance efforts in Year Two, as compared to Year One compliance efforts.
- The number of key controls being tested dropped dramatically, with 36 percent of respondents reporting testing fewer than 250 key controls in Year Two, as compared to 15 percent reporting testing fewer than 250 controls during Year One.
- Retail companies that utilize “brick and mortar” store fronts and manage inventories from distribution centers are exposed to additional financial, operational, and regulatory and compliance risks that many other businesses do not encounter. Therefore, the increased risk imposes additional responsibility for the organization to have some visibility of internal controls at the store locations and/or distribution centers.