Expected and Unexpected Impact of Sarbanes-Oxley Legislation on IT and Research Paper

Expected and Unexpected Impact of Sarbanes-Oxley Legislation on IT and Business - Research Paper Example After the enactment of this legislation, the collapse of major corporations was imminent as a series of restatements began to emerge from major companies. The presence of this legislation has led to a decrease of restatements and securities class actions that have been filed. However, according to SOX, the number is still high. This paper will examine the impact the legislation had on businesses, and what the future holds for companies that do not comply with the regulations the Act has in place. The most crucial aspect of the legislation was section 404, which focuses on the monitoring of internal controls in the organization. Presently, public companies are required to include reports of internal control reports, which are then monitored by the Public Company Accounting Oversight Board (PCAOB). This board works directly with the SEC to conduct reviews. In light of the above operations, accounting firms are now liable for any, and all their audits. This is what has probably pushed f or some reforms in public companies that are present in most parts of the region. Some of the major impacts that have rocked companies expected to comply with Sarbanes-Oxley legislation include; additional costs, additional liability, and even the purchase of internal control software (Harwood & Simmons, 2012). ... The purchase of internal control software has increased the costs that companies, small and large, incur during their annual reviews (Brodkin, 2007). In order to build a control system that works, companies are required to hire skilled personnel to handle these issues. This, ultimately, comes at a price. The cost of planning, tracking, and reviewing internal controls in no easy task, and the outside assistance requires capital. All these factors contribute to the high prices, but it is tantamount for companies to do this. The labor workforce and human resource that is present in most companies was also a factor to consider with the Sarbanes-Oxley legislation. These groups of individuals were at the forefront in pointing out the shortcomings of corporate governance. The issues were that management in most of the financial and accounting institutions were benefitting at the expense of the labor workforce present in their organizations (U.S. SEC, 2009). To most of the individuals in thi s group, the Sarbanes-Oxley legislation was a means of bringing management to account for all their conducts in their organizations. Some of the aspects of the labor workforce that were expected to be addressed by the SOX legislation included; the protection of whistleblowers, proper procedure of handling and tackling complaints (privately), and even the issue of executive pay and compensation. Unexpected impact of SOX After the implementation of SOX, some fields were first to be hit by the waves of transformation. One of the major fields to be hit was the IT field, which experienced some unexpected turns. The rapid implementation of internal controls saw the use of technologies in almost every company that needed the