Study Shows Foreign Private Issuers Ready to Implement Sarbanes-Oxley

A study conducted by Mazars, a large international audit firm, reveals that the majority of surveyed foreign private issuers are prepared for the implementation of the Sarbanes-Oxley Act, including the sec. 404 internal control mandates. While the great majority of issuers said that Sarbanes-Oxley forms an appropriate response to their main risks, they also recognize the high cost of compliance. But despite what is seen as excessive costs, most foreign private issuers do not envision delisting from US exchanges.

According to the survey, Sarbanes-Oxley is well appreciated by foreign private issuers for its strong focus on major risks in internal controls. The Act has required firms to develop an internal strategy adapted to their needs, based on analysis and documentation of risks and internal control procedures for accounting and financial information. Interestingly, European companies are less pro-SOX than their Asian and South American counterparts. Further, with the exception of British and Dutch companies, the majority of European foreign private issuers wish to see an increased investment from European authorities in establishing common rules in terms of internal controls.