In the wake of Enron and other corporate scandals, Congress last year passed the Sarbanes-Oxley Act which establishes a number of requirements for ensuring accuracy in reporting corporate financial information.  Sarbanes-Oxley imposes criminal liability for inaccurate financial reporting and imposes requirements that companies certify the effectiveness of their internal controls. 

For corporate real estate managers, Sarbanes-Oxley presents a problem because much of the data they report to management are incomplete and only marginally reliable.  This is not a fault of corporate real estate; it is symptomatic of the fact that real estate departments usually only provide acquisition and disposition services and are not responsible for paying the bills or otherwise managing the leases on a day-to-day basis.  As a result, it is unfair to expect corporate real estate to have clear control over or intimate knowledge of the actual financial cost of the company’s leases. 

Because Sarbanes-Oxley requires companies to certify the effectiveness of their corporate controls and imposes criminal penalties for inaccurate reporting, corporations will need to gain a greater level of confidence over the scope of their real estate and how much it is actually costing them.  To satisfy their auditors, companies will need to develop and deploy systems, processes and performance metrics so that corporate officers can comfortably rely on the data produced and their corporate auditors can verify and attest to the reliability of the processes used to produce them.