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The IUP Journal of Supply Chain Management :
Compliance in the Supply Chain: Implications of Sarbanes-Oxley for UK Businesses
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The key aims of this research are to not only estimate the current number of UK companies that have to be Sarbanes-Oxley compliant, but also how that number will grow over the coming decades, particularly given the impact of the supply chain. This study also examines UK organizations that will need to comply with Sarbanes-Oxley as a cost of doing business, raising capital or for general corporate governance best practice. The number of Sarbanes-Oxley compliant companies in the UK could be between 45,000- 60,000 over the next 10 years. Sarbanes-Oxley compliance could become an international standard of quality in corporate financial disclosures, a sort of ISO-9000 certification of management and reporting transparency. Companies adopting Sarbanes-Oxley may pay a price now, but will exploit an enviable competitive position in the future, making them preferred partners of large corporations, which must comply with Sarbanes-Oxley.

 
 
 

Most recent research and press reports on Sarbanes-Oxley have focused on large, dual-listed companies as well as on UK-based subsidiaries of US companies that have to comply with the regulation. Often, these companies have big compliance budgets and have been at the vanguard of Sarbanes-Oxley compliance in the UK. The key aims of this paper are to not only estimate the current number of UK companies that have to be Sarbanes-Oxley compliant, but also how that number will grow over the coming decades, particularly given the impact of the supply chain. The wider impact of Sarbanes-Oxley through the supply chain is a key issue, that many UK businesses will have to deal with, many of whom will not have realized the implications to date given their status as partners or suppliers of compliant companies. These supplier companies will need to reengineer their internal processes to provide data to meet the compliant companies' Sarbanes-Oxley reporting requirements. This paper also examines UK organizations that will need to comply with Sarbanes-Oxley as a cost of doing business, raising capital or for general corporate governance best practice. The focus of this study is on UK companies, employing between 50 and 1,000+ people.

The Sarbanes-Oxley Act was implemented as a direct result of serious financial misconduct by business leaders in the late 1990s and early 2000s, that hurt both large and small investors. In retrospect, much of the abuse that occurred was simply forgetting or ignoring basic ethics and common sense. So to whom does Sarbanes-Oxley apply? Any company whose securities are registered are required to file reports under Section 15(d) of the Exchange Act. In essence, this means any publicly traded company. The key to this report documentation is that the Act does not provide a definition of `relevant' or `material' and each company must determine what is relevant or appropriate material based on each circumstance. An important element of Sarbanes-Oxley will be how it affects businesses not now under its umbrella, namely, smaller and medium-sized businesses and supplier organizations that are not publicly held, yet seriously seeking to grow. These companies typically are growing large or fast enough to be interested in equity injections that require outside audits, yet remain too small to afford the fees of large accounting or consulting firms. Institutional investors are themselves required to provide relevant, accurate and timely disclosures as a prerequisite for financing third party investments. Consequently, the Sarbanes-Oxley requirements are becoming relevant to second tier companies' ability to finance growth investment strategies.

 
 
 

Supply Chain Management Journal, Supply Chain Management, Sarbanes-Oxley Act, Corporate Governance, Exchange Act, Investment Strategies, Initial Public stock Offering, IPO, Fast Mooving Consumer Goods, FMCG, Decision-Making Process, Acquisition Strategy, Global ecosystems, Enterprise Resource Planning, ERP.