Poorly-designed IT systems are the main barrier to companies establishing internal controls required by the Sarbanes-Oxley Act, according to research by accountancy firm Ernst & Young.

Under Section 404 of the accounting rules, which affect the European arms of companies listed in the US, firms must report on the effectiveness of their internal controls. However, 40 percent of companies said their IT systems impeded compliance.

Ernst & Young said firms often fail to grasp how their systems control processes and financial transactions. It said they should design systems to ensure the accuracy of reports, and map financial statements to processes along the review chain.

"Firms should engage with key stakeholders early, particularly with external auditors, before embarking on a project," said Paul Kennard, a lead partner at Ernst & Young in the UK.