Sarbanes-Oxley Goes Global

Forbes ^

[Sean Flynn]

According to critics, the Sarbanes-Oxley Act has caused a litany of ills: Executives are retiring early, public companies are going private, foreign firms are listing abroad and U.S. firms are losing their competitive edge. The sweeping law, written in the wake of the Enron scandal, has served as a scapegoat for all the evils facing corporate America since it was passed in 2002.

[Sean Flynn]

SOX going global will certainly be good for U.S. business, as it will make foreign firms listed on American exchanges relatively less competitive. In the long run, though, it will hurt U.S. leadership in world capital markets, as it will be a disincentive for firms to go public in the U.S. When will the SEC learn?

[FormerACLUmember]

Sarbanes-Oxley is a mega job killer, a total disaster for the USA.

[vrwinger]

Sarbanes-Oxley is a mega job killer, a total disaster for the USA.

Unless you are a SOX Consultant/Internal Auditor/Accountant....

[dinoparty]

There are people in this country that believe that we can be regulated into perfection...every human flaw eliminated under all-encompassing regulatory schemes. Lawyers (of which I am one) are quite prone to this disgusting belief. S.O. is yet another example of this.

[Moonman62]

Why are you blaming the SEC? The entire government, GWB, and Congress were out to shift the entire blame for our economic problems caused by Clinton/Rubin/Greenspan to the private sector. Congress passed SOX and GWB gave big budget increases to the SEC and the IRS.

The government should lead by example and follow stringent accounting rules. Enron didn't do anything the Congress hadn't been doing for decades.

[kpp_kpp]

S.O. gave a rebirth to the American IT industry.

Not that that makes it justifiable.

I'm not a S.O. 'hater', I just think it should apply to the federal and state governments too. (try not to die laughing)

[Moonman62]

The bankruptcies and prosecutions at Enron and Worldcom should have been enough. If the government wants stricter accounting it should lead by example.

[JBR34]

SOX is how I would set up an organization if I lived in France.

It is one of the biggest time sinks know to mankind. It's costs outway it's benefits. We may spend $10,000 for every dollar we save.

I know someone who actually has to fill out forms that say "This page intentionally left blank" because the SOX procedure says he has to do it if there is no activity. Leaving it blank is not good enough. And if he writes on the page (and he just did) he must then initial and date it because SOX says so. So he's signing off on pages saying they are blank. If he doesn't then the SOX police (SOX auditors) will write him up for being non-compliant.

Yep, It will stop a secretary from charging $3.00 in groceries to her department, but it won't prevent the fraud at top of a corporation.

If I wanted to, I could steal $100K from my company. It would take awhile, but it could be done. But I won't because it's wrong.

If I recall the fraud at Worldcom and Enron was at the top. SOX would not have prevented it.

[taxcontrol]

I totally disagree that SOX will hurt the US presence in the capital markets. The more likely scenario is that after a period of a few years, share holders will pressure either businesses or governments to make companies provide like compliance if not exact compliance.

[winner3000]

Some of the requirements of SOX relate to the independence of company boards. It is amazing that it took SOX to prevent Board members from offering consulting services to the same companies. Talk about conflict of interest! Actually, most of the problems that SOX is trying to correct are due to unethical CEO's. They packed the BOD's with their pals, and allowed them to profit from the company through juicy consulting contracts in return for being the CEO's rubber stampers. Even now those Board members are still accepting some outrageous CEO compensation schemes, as most of them are...gasp...CEO's themselves! They end up protecting each other.

The worst offenders have been technology companies CEO's. If you keep up with the news, many technology companies have had to restate their earnings thanks to SOX, as they had been manipulating how much management fleece their companies through the manipulation of options issue dates.

Is SOX perfect? Heck no. Many areas, especially areas related to fraud, do not take into consideration the concept of materiality. However, it has made entire companies aware of internal controls, and put teeth into the penal code for people who commit fraud. Top management know that they can go to jail if they knowingly cook the books. Long term, this will increase the confidence investors have in companies that have to comply with SOX.

[Mannaggia l'America]

S.O. gave a rebirth to the American IT industry.

Yeah, it's like Y2K all over again.

The real kicker is that SarbOx was supposed to address scandals like Enron and WorldCom - and these were not IT problems.

[indthkr]

"S.O. gave a rebirth to the American IT industry."

I can see why one might draw that conclusion because IT loves the expansion and creation of large automated bureaucracies, but IMO the net effect is still zero to negative for the technology sectors overall, and in the long run.

IMO SOX will ultimately be seen complete disaster for American technology competitiveness. Tech start-ups are going to head off-shore in droves.

[kpp_kpp]

It won't apply to the startups but it will certainly be a factor in going public. We'll see a lot less of that (as is already the case).