Compliance Blog

This blog has continued to wonder out loud over the past few years how there could be zero positive results from Sarbanes-Oxley.

• Why would companies not want good internal controls?
• Why would companies want fraud and errors in their operations?
• What company could not improve its operations and financial reporting quality with careful review and testing?
• If you took the public's money, shouldn't you disclose information so the investing public can make good decisions?
• Hasn't the business community become a paraiah to the average person?
• Haven't restatements been up four fold over 4 years?

Rhetorical maybe, but here are some other facts that just came out today: An excerpt from an article by the Washington Post is here:

"But one of the study's authors thinks there may be another reason: Companies have cleaned up their acts in the wake of corporate scandals that included the collapse of Enron Corp. and WorldCom Inc.

"It's possible that improved governance may have reduced plaintiffs' ability to allege fraud," said Stanford law professor Joseph Grundfest, who heads the clearinghouse. Still, he added that he continues to believe that Congress's major effort to improve corporate accountability, the 2002 Sarbanes-Oxley law, was too far reaching and too expensive to implement. "We could have achieved the gains of Sarbanes-Oxley at significantly lower cost," he said." Click here for the complete article."

We agree with Professor Grundfest on his conclusion that the gains from Sarbanes-Oxley could have been reached at lower costs. We have always been in the business of providing the best practices in governance and internal controls at the lowest cost.

However, the reality is that without the legislation no company would have made the efforts. Whether it is too far reaching is probably not true. Not reigning in the accounting industry sooner was more the problem.

The value of the good internal controls and disclosures is indisputable. The reduction in lawsuits says it all:

More good has happened out of the efforts put into Sarbanes-Oxley. And the investing public likes the results.

To find out how to cut your costs and improve results for your Sarbanes-Oxley Section 404/302 filings, see www.issuescentral.com and learn more about Compliance Playbook(tm). If you are a Canadian filer, see www.compliancepartner.ca to learn more about our exclusive Distribution Partner, Thomson-Carswell and Compliance Partner(tm).