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Sarbox Compliance: A Small Price to Pay

Lora Bentley

This morning we uncovered an anomaly: a column from Times Online that praised the Sarbanes-Oxley reporting requirements and concluded that any increase in headaches or admin costs that compliance with the much-abused corporate reform law brought about was worth it. Considering how vehemently firms in Europe have been responding to the prospect of Sarbox compliance, we were more than a little surprised.

 

The impetus for the writer's comments appears to be the role that Sarbox reporting requirements played in the discovery of the stock option backdating scandal. The U.S. Securities and Exchange Commission and the U.S. Department of Justice are investigating questionable stock option practices at nearly 100 companies.

 

The first formal charges arising from the practice were filed last month. The SEC also recently adopted new rules requiring greater visibility into corporate executive pay packages.

 

If Sarbox compliance can uncover backdating -- and thus prevent greater shareholder losses -- it can also uncover other corporate abuses. As such, it is doing exactly what it was enacted to do.


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