According to a recent Web poll, 45 per cent of U.S.-based business executives do not anticipate their organization will be able to meet the July 2006 Sarbanes-Oxley (SOX) deadline.
The poll was conducted by Akonix Systems, Inc.
Failing to meet the corporate accountability deadline can result in jail time for company executives and officers, as well as hefty financial fines.
According to SOX Section 404, public companies are required to undergo an annual evaluation of their internal controls and procedures for financial reporting, as well as an assessment for the effectiveness of these controls.
When electronic communications like instant messaging (IM) are involved in that process, those communications need to be logged, archived and available upon request.
Some large-cap businesses were forced to attest these controls were in place this year, while smaller-cap companies and corporate businesses who filed for an extension need to do so by mid-July 2006.
In Akonix’s survey of 157 executives at public companies, only 29 per cent felt they would be able to meet the deadline for archiving messages, while a further 26 per cent did not know if they would be prepared.
The cost of SOX compliance is a major barrier for organizations. Email and IM logging and archiving requirements are adding to this cost, with many companies scrambling to add more storage capacity to house the growing number of daily emails and instant messages created at their firms.
According to AMR Research, U.S. businesses will spend upwards of $15 billion on technology products and professional services this year alone in order to adhere to new compliance regulations. Spending on Sarbanes-Oxley compliance will account for about 40 per cent of this total, or about $6.5 billion.
“It’s alarming that almost half of the companies in our survey anticipate they will fail to meet the message retention requirements set forth in the next year’s SOX deadline, even with 10 months still remaining to get their systems in place,” said Francis Costello, chief technology officer at Akonix. “Businesses must realize that by not logging and archiving all electronic communications, including IM, it can result in corporate legal liability. Rulings from regulatory agencies encourage organizations to regularly disclose policies for email management and IM services, but many popular software applications aren’t equipped with features for enforcing compliance, which leads some organizations to neglect or ignore their own policies.”