Wednesday, October 20, 2004

Bumper Crop of Corporate Probes

Fannie Mae, Krispy Kreme, Marsh & McLennan, American International Group. This year's "fall harvest" — another bounty of companies under investigation by the Securities and Exchange Commission, the Department of Justice, or New York State Attorney General Eliot Spitzer — provides a reminder of the value of legislation like the Sarbanes-Oxley Act.

"Hopefully, they'll put something that's more practical in place," said Daniel Ustian, chief executive officer of truck maker Navistar International Corp., at the Reuters Autos and Manufacturing Summit in Detroit earlier this month. Other CEOs in attendance made similar comments, according to the wire service.

Section 404 of Sarbanes-Oxley, which must be implemented in next year's financial filings, also came in for criticism. "The internal control part is good," Ustian told Reuters, "but they need to step back and say, 'Is this really doing anything from a practical standpoint? Is this really controlling? Is this really giving the company some benefit?'." He was obviously mindful of a recent survey by Financial Executives International, which estimated that large companies will shell out an annual average of about $8 million to comply with Section 404.

Bumper Crop of Corporate Probes

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