Low employee morale and job dissatisfaction. Consultants. Rising audit fees. Dozens of new internal auditors. Executive meetings. Revenue-generating projects put on hold. The tangible and intangible costs of Sarbanes-Oxley compliance hit almost every public company in the United States and will soon reach many more around the globe.

Nearly half of financial executives feel the biggest issue related to SOX compliance is the need to avoid low employee morale in those responsible for compliance, according to the 2005 Oversight Systems Financial Executive Report on Sarbanes-Oxley. (Reducing internal and external costs ranks as the second most frequently cited challenge to ongoing compliance.)

The survey results hits on the key compliance issue: SOX compliance presents ongoing requirements, and companies cannot afford to repeat their year-one compliance efforts. The tangible costs have been extremely high while compliance burdens employees with extra work, which the employees view as redundant, unnecessary and a distraction from their real job and their goal of creating enterprise value, all leading to low employee morale.

Low employee morale and high job dissatisfaction present hidden expenses to SOX compliance, but the costs can quickly add up. First, a rise in employee turnover leads to direct expenses in job training as well as repeating the compliance education that went into year-one SOX compliance. Second, low employee morale threatens the business benefits achieved in the first year of SOX. And finally, executives must recognize the threat to the company’s culture and its tone toward financial integrity and compliance.

The solution is to link SOX compliance to tangible business benefits and automate the rote compliance tasks, such as testing and monitoring internal controls.