Is Sarbox Really One of the Decade's Worst Ideas?

Lora Bentley

As part of its year-end coverage, The Washington Post is running a series on "The Worst Ideas of the Decade." Right in the mix, next to "compassionate conservatism" and "world-is-flat movies," Nick Gillespie calls out the Sarbanes-Oxley Act of 2002.


Gillespie writes:

[T]he act was supposed to prevent scandals like those that brought down Tyco, Enron and WorldCom. It created the Public Company Accounting Oversight Board and mandated "internal control reports"... According to a 2008 Securities and Exchange Commission survey of officers at publicly traded firms, Sarbanes-Oxley cost the average company $2.3 million a year in direct compliance costs...

He also points out that most companies that are subject to its requirements don't see benefits that outweigh those costs. Then, of course, there's the lawsuit questioning the act's constitutionality that's before the U.S. Supreme Court.


I'll grant that Sarbox wasn't one of the best ideas of the decade. But I'm not sure it was one of the worst, either -- despite the efforts under way in Congress now to exempt small-cap filers from its requirements. And I'm not alone in my thinking.


Last week, for instance, I spoke with Vibato CEO and co-founder Teresa Bockwoldt, who says Sarbox compliance efforts based on Six Sigma methods not only save companies money, they are good business practices that would prove valuable even if Sarbanes-Oxley eventually is struck down as unconstitutional.


Stay tuned for more on Bockwoldt's ideas, as well as her recommendations for Sarbanes-Oxley New Year's resolutions.

Add Comment      Leave a comment on this blog post
Dec 23, 2009 10:14 AM Carl Berardinelli Carl Berardinelli  says:

This is Genius compare to the version of healthcare reform that is being voted on right now.


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