Happy Sixth, Sarbox

Lora Bentley

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.

Add Comment      Leave a comment on this blog post
Aug 7, 2008 2:02 AM Tri Tan Loc Tri Tan Loc  says:
Thankyou, very much Reply
Aug 7, 2008 12:45 PM Jolly Roger Jolly Roger  says:
As far I can see the only way that SOX works is to make lawyers rich & ensure those that will rig accounting and reporting that they should not worry - nobody is going to catch them or stop the the big fat bonuses even if they do catch you.So the fraudster and the lawyers are the ones that win, seems familiar somehow... Hard to dispute when only 4 or 5 whistleblower cases survived out of 1,000. With the very first SOX whistleblower case falling today after 6 years in court for what sounds like another technicality. The only thing SOX has done is cost America money, rooted out those pesky honest employees that have the audacity to stand up ... so they can be fired as an example to the other employees to shut up - or else.Guess what - its working! At least I did not hear of a whistleblower in Indy and its was what, the second largest bank crash in our history? Management indicated in $10B in 'accounting mistakes' that triggered eight figure bonuses... Fraud is theft and its no different than bank robbery - literally in this case.How much could a whistleblower, properly protected have saved America here? 4 out of 1,000 is pretty damning evidence of the ineffectiveness of SOX despite the Billions it costs companies and hundreds of Billions it costs America.Given that SOX had a 6 year head start on the Indy scandal I'd say it failed miserably, and likely in the majority of the 99.5% cases - where whistleblowers were shot down despite its 'protection'. Or is that 99.6% of cases as of todays ruling? You show me someone that has something positive to say about SOX and I'll show you a lawyer or a politician.As one senior partner in a big Fishy law firm once told me "SOX is Great! It's like Y2K for lawyers"I thought it was to bring protection and accountability - given the last half decade I see he in fact was correct and I the idiot. Reply

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