Describe why most companies expect significant added costs to their firm as a result of SOX compliance.

Most companies expect significant added costs as a result of SOX compliance due to the increased oversight and reporting requirements that it imposes. Companies must invest in additional technology, personnel, and training in order to create an internal control system that meets all the applicable regulations. In addition to this, they may need to hire outside consultants or auditors to verify their accounts which can also be quite costly depending on the complexity of the organization.

Furthermore, companies must bear in mind that SOX is intended as a preventative measure rather than being focused strictly on punishment so there are often hefty fines associated with non-compliance. This can have a major impact on a firm’s balance sheet since most entities do not have deep pockets so any unexpected expenses can put them at risk of insolvency if not managed properly. As such, it is essential for businesses to understand the true potential costs associated with complying with SOX before deciding whether or not it makes sense for them financially.