Such an excessive loss of market capitalization is not necessarily what legislators envisioned when they okayed Sarbanes-Oxley. Finance chiefs say the auditor-rotation provisions of the law are also causing unexpected problems. The requirement, detailed in Section 203, makes it illegal for a firm's lead audit partner to service an account for more than five consecutive fiscal years.

Before Sarbox, lead partners typically worked on one account for 7 or 8 years. Apparently, a lot of finance chiefs would prefer to go back to the old arrangement: over a third of the polled executives indicated they would like to see Section 203 ditched or the rotation requirement eased (to every 10 years, for example). And a large chunk of respondents — 64 percent — would oppose any legislation limiting the number of years an audit firm could work with a client.

The reason? Changing audit partners (or audit firms) can be a messy, expensive business. Bringing in a new firm means paying the old firm for the use of the previous two years' audited numbers. And quick switch-overs in engagement partners can disrupt smooth-running relationships, actually leading to — not reducing — errors. Says Bob Davis, CFO of Islandia, New York–based Computer Associates International Inc.: "A lot of audit failures happen when a new audit partner comes on an account."

Further, some finance chiefs believe that reducing the length of service of an independent auditor also reduces that auditor's value to the client. "Speeding up rotation does a disservice to us," argues Ken Minor, CFO of Sonic Foundry Inc., a software-applications company in Madison, Wisconsin. "Our company has a history and knowledge" that takes time for an auditor to absorb.

All Curriculum, No Vitae
It will also take some time before auditors absorb all the guidance coming from the PCAOB and the SEC. In the interim, finance executives say the lack of auditor input, along with the evaluation of internal controls every three months, has placed a heavy burden on corporate finance departments.

Although CFO has reported on this development before, the survey sheds light on just how extensive the problem is. Fully 75 percent of the respondents said that complying with Sarbanes-Oxley has substantially boosted their workloads, with about half noting that Sarbox compliance has made their jobs less satisfying. Even more worrisome, nearly one out of four controllers in the survey indicated the added load has made them consider a career outside of finance. That's a remarkable admission, especially considering that competent controllers are generally seen as key players in the battle against accounting fraud.

While damning, such responses do not mean finance executives see no good coming from their Sarbox efforts. Almost a third of the managers in the survey indicated that Sarbanes-Oxley compliance has actually been good for their careers. At Stamford, Connecticut-based Pitney Bowes Inc., Steven Green was promoted from finance chief of global mailing (the company's largest business unit) to corporate chief accounting officer. A large part of his job is helping with Sarbox compliance. "I think most CAOs are happy to have Sarbanes," Green says. "It gives them a greater degree of comfort regarding processes and controls."

Compliance with Sarbox has also led Pitney Bowes management to rethink how it handles some business processes. CFO Bruce Nolop reports that 404 documentation accelerated the company's plans to bring all of its accounts-payable and accounts-receivable operations under one roof, throwing off a reported savings of more than $500,000. Adds Green: "When you have the head of a business thinking about controls in addition to making money, that's clearly a positive."

As for Darer, he thinks Sarbox has restored much-needed credibility to the numbers companies produce. That, in turn, has made potential shareholders more willing to invest in companies that go public. Says the onetime Unica CFO: "They know [the companies] have to be at a certain standard of governance."

Time will tell if their faith in that standard is well placed.

David Katz is deputy editor of CFO.com. Survey conceived by research editor Don Durfee.

Retooling Sarbox
The surveyed finance executives had lots of ideas on how to alter Sarbox; easing requirements for internal-controls testing topped the list.

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