October 30, 2006
Mr. Cheney, You are Messing with Fire! Do not Mess with SOX!
President George Bush signed land mark legislation in 2002, Sarbanes-Oxley Act of 2002. Good job George.
Today, Mr. Cheney indicated that he thinks that maybe SOX is too tough.
After Enron, Worldcom, Tyco, etc the average investor was ready to see something that could make public company financial statements reliable again. But oh my, it is an election year, ladies and gentlemen! And your author is a loyal Republican! I have been a Republican since I was born - way before I could vote.
However, make no mistake about Sarbanes-Oxley. It is a good piece of legislation. It has checks and balances. Frankly, it asks for companies to use judgement and good ethical principles. The much maligned COSO framework really is a good piece of work.
Through much work with registrants and auditors, the framework is well understood by those using it. Small companies have whined non-stop about the excessive regulation but restatements are up 400% from 2001. So this legislation cannot be all "busy work".
Borrowing from our good friends at Mastercard - Investor Confidence is PRICELESS. Let us not forget the situation in 2002 after Enron when market confidence was so low and markets were at very low levels. It seemed then that nothing could be done to restore confidence.
After all, when you lose trust, we all know how hard it is to restore it. But little by little as the regulations were enforced for the largest filers, markets regained their confidence. Big investors supported the legislation and today we have markets at record levels.
Could it be that maybe this legislation is working? Yes it is. Do companies like having to do what they perceive as extra work? NO! But every company we have worked with on their internal controls projects have improved their business, not just complied with the legislation.
For many companies they came to realize that for example, their financial reporting processes were less than perfect. They now had the detail to improve them.
Capitalism is good. Investor Confidence is good. Leave SOX alone!
Do not let election fears overcome important good legislation that is in place and is proven to work. It is interesting that Mr. Cheney stands by decisions on Iraq but not on investor confidence in the markets with the highest standards in the world. Very disappointing.
If your company is public in the US or Canada and wants to comply with Sarbanes-Oxley or MI 52-109 cost effectively, see http://www.issuescentral.com/ to learn more about Compliance Playbook®. For companies based in Canada listed on Canadian or US exchanges, see http://www.compliancepartner.ca/ to learn more about Compliance Partner(tm).
