February 22, 2006
Paul Volcker and Arthur Levitt Criticize the ACSPC Recommendations
Interesting that so many people complain bitterly about Section 404 and its "unintended consequences' but financial restatements have been at an all time high since the Sarbanes-Oxley legislation was passed. No one can argue that lack of internal controls is a good thing.
Since 1977/1978 with the Foreign Corrupt Practices Act, companies were supposed to document their internal controls. It did not work. Sarbanes-Oxley put teeth into this existing legislation and provided audit standards and oversight.
An excerpt from the Seattle Times:
SEC bid to exempt firms from audits draws fire
By Laurence Arnold
Bloomberg News
A U.S. Securities and Exchange Commission panel's proposal to exempt 80 percent of public companies from having auditors certify their internal controls "simply goes too far," former Federal Reserve Chairman Paul Volcker and former SEC Chairman Arthur Levitt told the agency.
In a Feb. 13 letter to the SEC, a group including Volcker and Levitt said such a change would undercut the 2002 Sarbanes-Oxley Act by failing to safeguard against future accounting and company fraud. The letter was sent to SEC Chairman Christopher Cox and William Gradison, acting chairman of the Public Company Accounting Oversight Board (PCAOB).
"In passing the Sarbanes-Oxley legislation, the Congress adopted a reasonable approach to achieve real reform, not just the appearance of reform," the letter said. "It would be unfortunate now if the SEC and PCAOB undercut the effectiveness of congressional legislation through misguided regulatory action."
The law currently requires all U.S. public companies to have their internal controls validated by an auditor. Internal controls refer to the system of checks that companies put in place to safeguard assets, provide reliable financial reports and comply with regulations.
The SEC's Advisory Committee on Smaller Public Companies intends to recommend in April that only the largest 20 percent of U.S. public companies obtain annual approval of their internal controls by auditors, as required by Sarbanes-Oxley. For the complete article, click here.
Since 1977/1978 with the Foreign Corrupt Practices Act, companies were supposed to document their internal controls. It did not work. Sarbanes-Oxley put teeth into this existing legislation and provided audit standards and oversight.
An excerpt from the Seattle Times:
SEC bid to exempt firms from audits draws fire
By Laurence Arnold
Bloomberg News
A U.S. Securities and Exchange Commission panel's proposal to exempt 80 percent of public companies from having auditors certify their internal controls "simply goes too far," former Federal Reserve Chairman Paul Volcker and former SEC Chairman Arthur Levitt told the agency.
In a Feb. 13 letter to the SEC, a group including Volcker and Levitt said such a change would undercut the 2002 Sarbanes-Oxley Act by failing to safeguard against future accounting and company fraud. The letter was sent to SEC Chairman Christopher Cox and William Gradison, acting chairman of the Public Company Accounting Oversight Board (PCAOB).
"In passing the Sarbanes-Oxley legislation, the Congress adopted a reasonable approach to achieve real reform, not just the appearance of reform," the letter said. "It would be unfortunate now if the SEC and PCAOB undercut the effectiveness of congressional legislation through misguided regulatory action."
The law currently requires all U.S. public companies to have their internal controls validated by an auditor. Internal controls refer to the system of checks that companies put in place to safeguard assets, provide reliable financial reports and comply with regulations.
The SEC's Advisory Committee on Smaller Public Companies intends to recommend in April that only the largest 20 percent of U.S. public companies obtain annual approval of their internal controls by auditors, as required by Sarbanes-Oxley. For the complete article, click here.
