October 03, 2006
New York City, McKinsey and Enron: What do they have in common?
If you blurted out "Sarbanes-Oxley" you win. Well, maybe you don't win, but McKinsey is about to get a small engagement from NYC. Click here to read more.
Some background.
Jeffrey Skilling works at McKinsey. By all accounts he is very bright and driven. He helps Kenneth Lay develop new gas trading products. Skilling jumps to Enron. Business gets really good (now they are cooking with gas!), but then the gas gets shut off. Financial and career ruin for many. Investors start wondering about their investments. No faith, no money.
Sarbanes and Oxley get their "act" together. CEOs and CFOs should do more than testify, they should certify. Controls good, fraud bad.
A new era in financial regulation begins. Everyone gets very thoughtful. The 800 pound gorilla is always in the room. "Yes Virginia, there is a Santa, and he is reading every claus to ensure you've been good. He's a class act waiting to happen."
Lots of time and money are spent. We learn that internal control means something more than anger management. Some of the activity is non-value added driven by management ignorance and by paranoid "externals". Much of the activity is positive. Transparency improves as does management "hygiene" with respect to financial accuracy and control. Investors like what they see and hear. Markets go up, and yes, it is partly because of Sarbanes and Oxley. Faith is back, so is the money. But hark, what is that tinkling I hear? Is that Cristal in London or Dom in Hong Kong? Could it be that in our desire to restore faith, we have driven people to markets with more "flexible" regulatory regimes. Where have our IPOs gone? What happened to our birthright and entitlements?
I know what the problem is: Sarbanes-Oxley!
Root cause (great name for a law firm, don't you think) of IPO shrinkage in North America? Well, it could be the cold shower of high cost legal/accounting fees associated with the IPO process in the U.S., or the discounts given at the offering stage to incent investors to jump on board? Or it could be that the surplus cash driven by American consumer spending is fueling markets and home grown IPOs in places like China where they want to spread the money and fees around in their own neighborhood. Oh and yes, perhaps it is for some the desire to avoid the scrutiny and sunshine associated with Sarbanes-Oxley.
In any event, McKinsey is going to help NYC get to the bottom of this.
The age of irony, just one example of many.
If your company is based in the U.S., or outside of North America, and needs to comply with SOX efficiently and without the drama please visit http://www.issuescentral.com/ to learn more about the Compliance Playbook(TM).
If you are a Canadian-based filer needing to affordably comply with either SOX or MI 52-109 please visit the website of our exclusive Canadian distributor, Thomson Carswell, at http://www.compliancepartner.ca/ to learn about Compliance Partner(TM), plus their new product for the Mining Sector, Compliance Partner(TM) - Mining Edition.
Thomson Carswell is also providing some web-based seminars for TSX and TSX Venture companies on the topic of MI 52-109 and recent changes during the months of October and November 2006. Please click here for more information.
Some background.
Jeffrey Skilling works at McKinsey. By all accounts he is very bright and driven. He helps Kenneth Lay develop new gas trading products. Skilling jumps to Enron. Business gets really good (now they are cooking with gas!), but then the gas gets shut off. Financial and career ruin for many. Investors start wondering about their investments. No faith, no money.
Sarbanes and Oxley get their "act" together. CEOs and CFOs should do more than testify, they should certify. Controls good, fraud bad.
A new era in financial regulation begins. Everyone gets very thoughtful. The 800 pound gorilla is always in the room. "Yes Virginia, there is a Santa, and he is reading every claus to ensure you've been good. He's a class act waiting to happen."
Lots of time and money are spent. We learn that internal control means something more than anger management. Some of the activity is non-value added driven by management ignorance and by paranoid "externals". Much of the activity is positive. Transparency improves as does management "hygiene" with respect to financial accuracy and control. Investors like what they see and hear. Markets go up, and yes, it is partly because of Sarbanes and Oxley. Faith is back, so is the money. But hark, what is that tinkling I hear? Is that Cristal in London or Dom in Hong Kong? Could it be that in our desire to restore faith, we have driven people to markets with more "flexible" regulatory regimes. Where have our IPOs gone? What happened to our birthright and entitlements?
I know what the problem is: Sarbanes-Oxley!
Root cause (great name for a law firm, don't you think) of IPO shrinkage in North America? Well, it could be the cold shower of high cost legal/accounting fees associated with the IPO process in the U.S., or the discounts given at the offering stage to incent investors to jump on board? Or it could be that the surplus cash driven by American consumer spending is fueling markets and home grown IPOs in places like China where they want to spread the money and fees around in their own neighborhood. Oh and yes, perhaps it is for some the desire to avoid the scrutiny and sunshine associated with Sarbanes-Oxley.
In any event, McKinsey is going to help NYC get to the bottom of this.
The age of irony, just one example of many.
If your company is based in the U.S., or outside of North America, and needs to comply with SOX efficiently and without the drama please visit http://www.issuescentral.com/ to learn more about the Compliance Playbook(TM).
If you are a Canadian-based filer needing to affordably comply with either SOX or MI 52-109 please visit the website of our exclusive Canadian distributor, Thomson Carswell, at http://www.compliancepartner.ca/ to learn about Compliance Partner(TM), plus their new product for the Mining Sector, Compliance Partner(TM) - Mining Edition.
Thomson Carswell is also providing some web-based seminars for TSX and TSX Venture companies on the topic of MI 52-109 and recent changes during the months of October and November 2006. Please click here for more information.
