Other Countries Emulate Sarbox, but Learn from U.S. Mistakes

Lora Bentley

Since Sarbanes-Oxley was enacted in 2002, companies have been complaining that its costs outweigh its benefits, and different groups have been lobbying for its reform for just about as long. Earlier this month, the Securities and Exchange Commission took the first steps toward that reform when it proposed relaxed audit requirements for smaller companies, among other changes.

 

In spite of it all, however, foreign governments model their own corporate reform laws after Sarbox. For example, Japan's version, called J-SOX, will be effective in fiscal year 2008, according to The Japan Times.

 

A quick read of the story and the FAQ that follows reveals that the law will require approximately 3,800 public companies in Japan to shore up their internal financial controls and then certify the effectiveness of those controls, among other things. Like their counterparts in the U.S., Japanese executives are concerned about the cost of meeting the new requirements -- both in terms of money and manpower.

 

Thankfully, though, Japanese regulators have also been paying attention to the headaches that Sarbox has caused U.S. businesses and have done what they can to avoid those same headaches from the start. The rules are not as broad as those in the U.S., and requirements differ according to the size of the business, the story says.



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Jan 2, 2007 8:57 AM Bj�rn Rohde-Liebenau Bj�rn Rohde-Liebenau  says:
Who emulates whom ? British or German Corporate Governance - completely different  but certainly not inefficient systems may have provided a blueprint for at least some elements of Sarbox. This may be the underlying cause why in fact, so many German companies have long adopted all or nearly all of Sarbanes Oxley rules, why they have hired hundreds of SOX specialists.  What German companies really fear - and that is probably what they see as "U.S. mistake" - is formal regulation. Comply or explain - this strategem of the friendly embrace originally behind the British Cadbury Code - has been working extremely effectively for the German Corporate Governance Codex. Banks, investors and other stakeholders do want to know and these rules and codices seem to give them just the right tool to improve trust and transparency.There are a few exceptions where freeriders would speculate on illicit advantages: anything that is considered a criminal offense cannot be left to self-regulation and peer pressure. And whistleblowing - a healthy clean-up mechanism for inefficient internal risk communication - cannot work in an environment of criminal intent. But even at this time European whistleblowing systems could be more advanced than the U.S. ones, including those under Sarbox (more on Jan 18, here http://www.conference-board.org/webcasts/upcomingWebcast.cfm?id=1369).The management needs reasons to get interested in the extra in the extra information be it from Sarbox instruments, be it from whistleblowing. Where the management finds such reasons, the system will work -  that is what the international community is learning. Reply
Aug 1, 2007 12:20 PM Binod Khadka Binod Khadka  says:
DearI am attend your programee. Reply

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