Study: financial compliance on the upswing

Large public companies in the United States reported dramatically fewer weaknesses in their financial accounting last year compared to 2006, according to an analysis by Boston-based trade publication Compliance Week released today.

Eleven companies reported a total of 14 weaknesses in the study of 426 of the S&P 500 companies, the analysis said. In the 2006 study, almost every single one of the more than 400 randomly selected companies reported at least one material weakness with more than 800 weaknesses reported.

This year's results showcase the progress of the Sarbanes-Oxley Act, which enacted financial reporting rules, said Matt Kelly, editor-in-chief of Compliance Week.

"Companies took a hard look at their accounting systems immediately after SOX was passed, found all sorts of nasty problems, and spent a lot of money to fix them," Kelly said in a press release. "Now we're seeing fewer mistakes and less effort to comply with SOX because the systems to report financial results are working well."
(By Elizabeth Campbell, Globe correspondent)