Independent research and direct experience indicates that the rush to compliance is creating a commonly traveled maturity cycle that is being repeated in many companies.

Phase 1. Compliance certification and approval - The imposition of strict deadlines backed up by rigid enforcement from auditors drives the initial project objective - which is to comply with the law. No corners are cut and costs are high.

Phase 2. Cost reduction in the compliance process - With year 1 compliance under their belt many companies seek to reduce the cost and effort. Learning curve efficiencies improve productivity. Manual processes are supported by the adoption of tools and automation. There is a reduction in the number of controls, more tests are performed by internal audit and there is a drive towards repeatability.

Phase 3. Creating a sustainable compliance environment - With the ability to repeat there is a movement towards a sustainable continuous environment rather than a process driven by an annual reporting deadline. Risk and financial controls are built into business processes making it much easier to pursue business strategy such as reorganisations or acquisitions - without restriction from static and inflexible controls.

Phase 4. Deriving wider business value from compliance - In the mature stage compliance is a major contributor to effective management at all levels. Controls and risk management support business processes and objectives. The information they yield is sent to scorecards and dashboards. This greatly assists in good governance, management decision making and delivering shareholder value.

This cycle underpins a fundamental belief in the value of financial controls.

SOX compliance is not a punishment for the crimes of Enron and Worldcom. Quartus believes most companies should choose to optimise their financial controls - even without the force of legislation. The cycle suggests that successful companies will use financial controls and risk management to increase - as well as protect - shareholder value and to create competitive advantage.

Total Quality Management (TQM) brought comparable gains to process engineering in the 1980s. A similar awakening is slowly taking place concerning financial controls.