Sarbanes-Oxley

To Our Clients and Other Friends

Implementing Section 404 of the Sarbanes-Oxley Act of 2002 (Section 404) is one of the most involved processes companies are facing today. We continue to share what we know about how other companies are approaching key issues. As a result, Ernst & Young has begun an ongoing process of surveying companies and gathering needed information, which we will distribute to you.

We recently completed a survey of 100 major businesses representing virtually all industries in todays marketplace about their Section 404 preparations and processes. In addition, we collected information from hundreds of other meetings we have had with global company executives. Our findings and observations from those interactions have helped us identify what we believe are emerging trends and practices consistent themes among companies as they try to build effectiveness and efficiencies in their processes and embed control consciousness throughout their companies.

Some key issues addressed:

• Companies in our survey initially budgeted from 10,000 to 200,000 hours for the Section 404 project. We explore several lessons learned by companies seeking to contain costs.
• Companies continue to struggle with their approach around company-wide controls, information technology-based controls, and transactions processed by third parties. We analyze the approaches currently being deployed in each of these areas.
• With less than six months until initial reporting, our survey provides a snap-shot of where companies are in the process.

This knowledge is important now and will continue to be so as your company completes its implementation. We hope our ongoing research and communication process will help you measure your efforts against those of your peers. Ernst & Young will continue to observe and analyze key issues around Section 404 and will provide periodic updates to you to help make your path more confident and predictable. To provide comments, ask questions, or obtain additional information, contact Tom Bussa, Global Director of Business Risk Services at thomas.bussa@ey.com or your local Ernst & Young office.
Emerging trends in internal control - first survey)