March 07, 2006
Let's not get Evidence Amnesia when it comes to SOX
There is so much noise these days about the overburdening of smaller companies with Section 404. But let's not forget that this legislation was enacted due to real problems. Since the legislation was enacted, real problems have had a bright light shone on them.
Restatements have doubled! A larger percentage of these restatements have been with smaller companies. So if your company takes the plunge to be public, it is a big responsibility. There should be more work and higher expectations.
Yes fraud can be committed post-404. No one is arguing that. But one thing that is for sure, fraud has probably NOT increased since SOX was enacted. Truly there is more awareness of controls and fraud prevention. There is better behavior when it comes to internal controls over financial reporting and control environment.
So let's not get evidence amnesia and throw the baby out with the bath water. Controls are good. While Section 404 is not perfect, no one can really imagine a time anymore when controls are not a focus.
An excerpt from an article is here:
Study: SOX Helped Double Financial Restatements
Source: InstitutionalInvestor.com
The effects of the Sarbanes-Oxley have been dramatically felt by companies as witnessed by the skyrocketing number of companies that have restated their financial results, Glass Lewis & Co. has found. Last year, there were 1,195 restatements by U.S. companies, almost double the 613 in 2004, as companies appear to be taking more care in filing results. But the research firm also expects that number to level off or drop, as early as this year, as companies improve their internal controls and avoid some the accounting errors that spawned SOX in the first place. For the complete article, click here.
If your company needs to effectively comply with SOX 404 or CSOX, see www.issuescentral.com to learn more about the Compliance Playbook(tm) or if your company is based in Canada, see www.compliancepartner.ca to learn more about Compliance Partner(tm).
Restatements have doubled! A larger percentage of these restatements have been with smaller companies. So if your company takes the plunge to be public, it is a big responsibility. There should be more work and higher expectations.
Yes fraud can be committed post-404. No one is arguing that. But one thing that is for sure, fraud has probably NOT increased since SOX was enacted. Truly there is more awareness of controls and fraud prevention. There is better behavior when it comes to internal controls over financial reporting and control environment.
So let's not get evidence amnesia and throw the baby out with the bath water. Controls are good. While Section 404 is not perfect, no one can really imagine a time anymore when controls are not a focus.
An excerpt from an article is here:
Study: SOX Helped Double Financial Restatements
Source: InstitutionalInvestor.com
The effects of the Sarbanes-Oxley have been dramatically felt by companies as witnessed by the skyrocketing number of companies that have restated their financial results, Glass Lewis & Co. has found. Last year, there were 1,195 restatements by U.S. companies, almost double the 613 in 2004, as companies appear to be taking more care in filing results. But the research firm also expects that number to level off or drop, as early as this year, as companies improve their internal controls and avoid some the accounting errors that spawned SOX in the first place. For the complete article, click here.
If your company needs to effectively comply with SOX 404 or CSOX, see www.issuescentral.com to learn more about the Compliance Playbook(tm) or if your company is based in Canada, see www.compliancepartner.ca to learn more about Compliance Partner(tm).
