The Sarbanes-Oxley Act, which was created to better scrutinize and police the accounting and controls of public companies, has inspired a growing number of private companies, to change their accounting practices voluntarily.
In a survey of 1,359 chief financial officers of privately held businesses, conducted by Robert Half Management Resources, 48 percent said that they have made adjustments to their companies’ accounting and reporting processes since the introduction of new regulations including Sarbox.
Among those who cited a specific area of change, their top responses were:
- Payroll/benefits, 44 percent
- Expenditure/purchasing, 37 percent
- Accounts receivable/sales, 31 percent
- Capital assets, 31 percent
- Conversion/inventory, 31 percent
- Credit management/collections, 29 percent
- Disbursements, 25 percent
- Financial close, 22 percent
“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, executive director of Robert Half Management Resources, in a statement. “As a result, 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.”