The ups and downs of going public.

• Author: Cytron, Scott H.

The public trusts the business marketplace to ensure that companies operate ethically, deliver a quality product or service, and employ sound accounting practices. Public companies, in particular, are scrutinized because they are extremely accountable to their stakeholders--and certainly consumers and investors. What are the advantages of going public and how can an accounting professional become an integral part of the solution, providing intellectual capital and a true value-add to the internal and external environment?

Sarbanes-Oxley (SOX) is often referred to as the 4,000-pound gorilla hanging over the heads of American business. Yet, there isn't an owner on the planet who probably doesn't dream of making the transition from private business to public company--escalating itself into the stratosphere, where a reputation is made or broken based on a listing with a stock exchange.

If you listen closely, you can even envision the owner ringing the NYSE opening bell while surrounded by family members and key associates.

In addition to the cost to comply with SOX requirements, remaining accountable to employees, shareholders and the public is a bigger issue than ever. Why would a company want to go public?

While the most obvious reason is the ability to grow a company, other reasons focus on the future wealth of the business owner and employees, as well as an entrepreneurial spirit in which owners buy and sell businesses to meet their own personal and professional aspirations.

Perhaps its just the "American" thing to do. Whatever the reason might be, one of the professional service groups along for the ride is the CPA, whose innate mix of competencies, skills and acumen help solidify a public company's presence.

Requirements and mandates

There's no doubt that one of the most important and influential groups to help Ohio and other states maintain a strong economy are CPAs and accounting professionals, who do their best to steer organizations toward growth positions that will sustain them for the long term. However, the challenges faced by businesses of all kinds--especially those endured by public companies required to follow SOX, in particular--add yet another layer to an already difficult environment. As a result, unexpected activities are plentiful.

"Initially, the surprises around SOX were around identifying controls in areas an auditor didn't typically think of as having controls we could or should rely on in our audit work," says Mark Stauffer, CPA, senior vice president of audit for Cardinal Health in Dublin, Ohio, a Columbus suburb. "For most companies, the best example of this was tax. More recently, we've been pleasantly surprised with the management insight we've gained in a structured way about how our internal controls work. That's provided a basis for focusing and measuring process improvement efforts."

Stauffer supports the Audit Committee of Cardinal Health in assessing the internal controls over financial reporting. This includes the performance of financial, operational and IT audits, and oversight of the company's process to comply with SOX 404. He says the company spends more than 10,000 hours of Cardinal Health time annually just to document and...