What are some unintended consequences since the Sarbanes-Oxley law passed in 2002?
The law was designed to help prevent massive frauds like those that occurred at Enron and WorldCom from happening in other companies. Sarbanes-Oxley deals with a number of things—board and board committee independence, auditor and lawyer responsibilities, and internal control issues (Section 404). The cost of implementing the internal control rules of Section 404 is only one of the unintended consequences that rippled through the corporate sector as the new regulations were implemented. These costs have taken companies by surprise. Companies have incurred huge one-time costs to implement systems that assess a firm’s internal controls. These include the costs of changing current accounting systems, such as costs of additional staff or training for current accounting staff, and possibly a change in information technology systems. Ongoing costs include more expensive, longer audits; more expensive legal retainers; more compensation for internal financial, accounting, and legal staffs; and
