Amid all the hype over Red Flags regulation, an important date slipped by me last week. Sarbanes-Oxley turned six. The sixth year may not be as significant as the fifth -- five being a typical milestone year. But I think perhaps the past year was the first since I have been covering Sarbanes-Oxley that I saw more stories saying Sarbox is working than I did stories saying it is not.
Changes made by the Securities and Exchange Commission as to how Sarbanes-Oxley section 404 is implemented and the adoption of Accounting Standard 5 by the Public Company Accounting Oversight Board had a lot to do with it, I think. They shifted auditing and compliance to more principles-based processes than objective ones, and many companies have seen reduced compliance costs as a result.
On the other hand, Chase Cooper reported Monday that not much has changed in the last year. The writers have a point, to a certain extent. Sarbox compliance requirements have been delayed yet again for small public companies. Corporate whistleblowers seeking protection under Sarbanes-Oxley still don't find much. And perhaps most disturbing is the lawsuit currently before the U.S. Court of Appeals for the District of Columbia Circuit. The Free Enterprise Fund and others are challenging the constitutionality of the PCAOB's structure. Chase Cooper suggests the board will be absorbed into the SEC.
Next year will have stories of its own, I'm sure. Happy belated birthday, Sarbanes-Oxley.