Companies will not pre-empt European legislation

A 100% of European companies questioned in a recent survey believe that it is only a matter of time before EU legislation follows the precedent set by the Sarbanes-Oxley Act (SOX) in the USA.

100% of European companies questioned in a survey by Wax Digital believe that it is only a matter of time before EU legislation follows the precedent set by the Sarbanes-Oxley Act (SOX) in the USA.

43% stated that they expect any future EU legislation to be tougher, but none of those questioned are making plans to pre-empt such legislation - they will only act when required by law.

The survey questioned manufacturers with a GBP 500m+ turnover about how they believed SOX compliance was impacting them and their IT decision making - and without exception, those based in Europe and the UK with no US parent company remain sure that unless forced into it, they would not be taking measures to prepare for any potential EU legislation.

For companies based, parented or even just doing business in America, the Sarbanes-Oxley Act is the single most important piece of legislation affecting corporate governance and financial disclosure since the US securities laws of the early 1930s.

The Act, brought about in the wake of the Enron scandal, requires public companies to provide highly detailed financial reporting, and demands an accurate and timely audit of all finance-related business processes.

"It has never been more important for organisations to apply and enforce data controls, however our research has highlighted that companies are refusing to think long term about potential European legislation and take measures to ensure they're ready for it," said Daniel Ball, director, Wax Digital.

Since the financial reporting processes of most organisations are driven by supply chain systems, one would expect automation of compliance and control processes to have an equally low impact on UK companies.

This is not the case however, the same companies placed a 'moderate' to 'high' importance on automation of compliance.

"The market for process automation tools and services is healthy, but it remains the general case that where companies do not have a US listing, SOX is not a driving force behind decision making in IT," said Ball.

Further, without a reason to bring about change, things are not likely to do so - with only 29% of respondents anticipating a growth in priority over the coming 12 months, and 72% stating that they do not believe improved automation of compliance controls and processes has a perceived impact on a company's share price.

"There has been a lot of press about the cost of SOX compliance on an organisation.

UK companies still see it as a big burden for little benefit diverting money and effort from other business needs.

Our UK customers tell us enterprise software and systems are still about making it easy for customers to do business with them," concluded Ball.

* About Wax Digital - Wax Digital helps companies achieve their business objectives quickly and effectively by making existing IT investments work harder.

Wax Digital enterprise service bus enables customers to integrate disparate IT assets with unparalleled speed and efficiency, creating the foundations for accelerated performance.

Wax Digital Application Matrix expresses that architecture in the form of enterprise-class eBusiness applications.

Wax Digital solutions are in operation with 180,000 companies across Europe and carry over EUR 1 billion in trade annually.

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