Study Says Sarbox Won't Last Long

Lora Bentley

A Florida State University finance professor says the Sarbanes-Oxley Act will soon be taking its leave, reports Insurance News Net.

 

Bruce Haslem makes his prediction after reviewing information collected from 762 publicly traded companies just after Sarbanes-Oxley was enacted. His conclusion?

[C]ertifying a company's financial earnings statement is "a non-event" making no difference to investors.

That's why Congress should up the penalties for corporate fraud and executive wrongdoing, but do away with the rest of Sarbanes-Oxley's requirements, he suggests. In fact, Haslem says the act will "go away" in the next administration, if not before the current one draws to a close.

 

He calls the certification requirement "a marginally valuable addition" to corporate governance, and as such, it seems, not worth the high cost of compliance.

 

Maybe I'm missing something, but if the requirement that CEOs sign off on company financial filings is the problem, would it not make more sense to get rid of that one requirement and leave the rest of the act intact?



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Sep 5, 2007 1:15 AM Ken McNees, CPA, CISSP, CISA, CISM Ken McNees, CPA, CISSP, CISA, CISM  says:
With all due respect to Mr. Haslem, I believe he may be missing the point.He states "Certifying a companys financial earnings statement is a non-event making no difference to investors." I do not believe this is a non-event because investors recognize that another "Enron" is not in their best interest, and Sarbanes Oxley significantly reduces the potential of false assertions which could level a company (and their investment). I believe Sarbanes Oxley has effectively forced top executives to understand and be responsible for all assertions made in the financial statements (not financial earnings statements) because it's their signature going down as the 'responsible party'. If one had to sign off on the financials in a Post Enron environment, with potentially huge financial fines and prison time looming if your assertions prove false - would this be a non-event for for the signer? With Sox in place, you'll never again get the Kenneth Lay "Oh I just didn't know - this company is too big to understand" nonsense.Give the investors a little credit. They aren't stupid. Sarbanes Oxley isn't going anywhere.Ken McNees, CPA, CISSP, CISA, CAP, CISM Reply
Sep 6, 2007 10:22 AM Tommy Lambden Tommy Lambden  says:
Ken has got it right. To much Enron stuff in the past make it a certainty that investors be protected, and I also think calling it a non-event is silly. Reply

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