July 19, 2007
The SOX Effect: Five Years Later
While Sarbanes-Oxley (SOX) may be the most maligned piece of legislation in the history of US finance, it has had positive affects.
Prior to SOX, there was most certainly corruption among corporate executives but the rules were much more loose, so it was possible to say " My accountant or lawyer made me do it!". Post SOX, these excuses no longer hold water. Also, the SEC has been much more aggressive in recent years on prosecuting offences for fraud and regulatory non-compliance. They have a battery of attorneys and accountants to spend time delving into the details to prove the cases.
An excerpt from CFO.com is here:
"While Enron, WorldCom, and Tyco offer the marquee examples of CFOs brought down in the past five years of legal action against accounting abuses, a report issued by the President’s Corporate Fraud Task Force calculates that at least 53 finance chiefs have been convicted since 2002.
In what is becoming a great year for fifth anniversaries of corporate enforcement activity, the tally of convicted CFOs appeared in the task force's review of its own first five years in business. It said that there have been 1,236 convictions in all in such corporate cases, including 214 chief executives, 23 corporate counsels or attorneys, and 128 vice presidents. The task force gave itself significant credit, noting that it "has compiled a strong record of combating corporate fraud and punishing those who violate the trust of employees and investors."
At the end of the day, there has been progress in keeping the US financial markets safer for investors. This is an important accomplishment to say the least.
At the same time, the SEC has done more to reach out to foreign filers by allowing International Financial Reporting Standards (IFRS) to used in filing financial statements in the SEC filings. They have even gone further to propose that in the near term, not only can a registrant use IFRS instead of US GAAP but they can also skip the reconcilation between the two.
The SEC has a tough job. And yes someone does have to do it if faith in markets is to be assured.
Keep up the good work.
If your company has to comply with SOX 404 or NI 52-109, and wants to do it in a sensible and cost effective way, contact http://www.issuescentral.com/ for more information on Compliance Playbook® for companies based outside of Canada. For Canadian based companies, see http://www.compliancepartner.ca/ for more information on Compliance Partner™ from Thomson
Prior to SOX, there was most certainly corruption among corporate executives but the rules were much more loose, so it was possible to say " My accountant or lawyer made me do it!". Post SOX, these excuses no longer hold water. Also, the SEC has been much more aggressive in recent years on prosecuting offences for fraud and regulatory non-compliance. They have a battery of attorneys and accountants to spend time delving into the details to prove the cases.
An excerpt from CFO.com is here:
"While Enron, WorldCom, and Tyco offer the marquee examples of CFOs brought down in the past five years of legal action against accounting abuses, a report issued by the President’s Corporate Fraud Task Force calculates that at least 53 finance chiefs have been convicted since 2002.
In what is becoming a great year for fifth anniversaries of corporate enforcement activity, the tally of convicted CFOs appeared in the task force's review of its own first five years in business. It said that there have been 1,236 convictions in all in such corporate cases, including 214 chief executives, 23 corporate counsels or attorneys, and 128 vice presidents. The task force gave itself significant credit, noting that it "has compiled a strong record of combating corporate fraud and punishing those who violate the trust of employees and investors."
At the end of the day, there has been progress in keeping the US financial markets safer for investors. This is an important accomplishment to say the least.
At the same time, the SEC has done more to reach out to foreign filers by allowing International Financial Reporting Standards (IFRS) to used in filing financial statements in the SEC filings. They have even gone further to propose that in the near term, not only can a registrant use IFRS instead of US GAAP but they can also skip the reconcilation between the two.
The SEC has a tough job. And yes someone does have to do it if faith in markets is to be assured.
Keep up the good work.
If your company has to comply with SOX 404 or NI 52-109, and wants to do it in a sensible and cost effective way, contact http://www.issuescentral.com/ for more information on Compliance Playbook® for companies based outside of Canada. For Canadian based companies, see http://www.compliancepartner.ca/ for more information on Compliance Partner™ from Thomson
