Tuesday, January 15, 2008 Do financial restatements mean anything these days? The Securities and Exchange Commission Advisory Committee on Financial Reporting is looking into the huge increase in financial restatements by public companies since Sarbanes-Oxley was passed in 2002—a review triggered, at least in part, by SarbOx critics who contend that restatements are expensive, time consuming and of questionable value to shareholders, who increasingly ignore them. The first academic study examining how such restatements affect companies’ ability to secure bank loans, however, suggests that lenders find the information important. In fact, the authors of the report found that businesses that reported financial gaffes—whether intentional or not—ended up paying substantially higher interest rates on loans. The research also revealed that restatements led to stricter terms for borrowers. The study, conducted by Professors John Graham of Duke University, Si Li of Wilfred Laurier University and Jiaping Qiu of McMaster University, looked at data from a U.S. Government Accountability Office (GAO) database of 919 restatements announced by 800 public companies between Jan. 1, 1997 and June 30, 2002. The professors then combed through a database maintained by Loan Pricing Corp., which collects information on commercial loans made to both U.S. and foreign corporations. The SarBox: The bill for restatements can be costlyLabels: lending, restatement, sarbox
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Saturday, May 19, 2007 Teamwork counts, especially when it comes to committing crimes at a corporation. In a new examination of 374 companies accused of securities fraud between 1997 and 2002, an average of seven people were implicated in each case, including CEOs, chief financial officers, chief operating officers, general counsels, board directors and auditors. "Far from being a solitary act, securities fraud necessarily requires complicity," said William Black of the Kansas City, Mo.-based Institute for Fraud Prevention, which sponsored the study. The institute is a coalition of universities funded by the Association of Certified Fraud Examiners, the American Institute of Certified Public Accountants, accounting firm Grant Thornton LLP and D-Quest Inc., a risk-management firm. Tuesday, February 06, 2007 I am keen on making contacts with independents that are interested in developing an informal relationship with other specialists in this space to share work in challenging projects. Given the wealth of areas for specialization in the risk and control field, I am interested in cultivating relationships with professionals interested in project work, or looking for assistance in efforts that have lined up. I would love to hear from folks interested in expanding their network of professionals for possible project work in the future. For those that have been reading Inside Sarbanes Oxley since it launched in the fall of 2004, I hope we've done a good job of keeping you informed of emerging issues and developments around the regulatory impact of Sarbanes Oxley. You will recognize that we've not done much in the way of connecting with readers and practitioners within this community, because so many professionals have been buried beneath the chore of just getting projects across the finish line. I now want to reach out, making connections with people that are still grooving on this work after a few implementations. As Publisher of Inside Sarbanes Oxley and a risk and controls consultant, I continue to thrive on this work. I love the opportunities that come with a new engagement and control environment implementation, and seeing the dramatic changes that occur within an organization in a period as short as a few months. I also appreciate the new opportunities for learning that come from working with new people, and drawing new insights from their experiences. As the breadth of the on-going compliance requirements continue to be hashed out, it occurs to me that full implementations (risk assessment through year 1 testing) will continue to shrink. Obviously there a few opportunities that remain, but the vast majority of work seems to already be shifting toward outsourced testing resources and internal control environment managers (solo artists asked to oversee the health over testing results and manage change into the documentation developed to-date). I recognize that not everyone shares the risk tolerance of the independent consultant. I also recognize that not everyone is interested in engagements across the country or around the globe. That said, I welcome the opportunity to begin conversations that could lead to collaborative opportunities for the many of you running small (or individual) consultancies. If gaining visibility to such a community would be of interest to you, please drop me a note at toby.lucich@insidesarbanesoxley.com, or connect to me at LinkedIn (http://www.linkedin.com/in/tobylucich). Note that connections via LinkedIn are public, so contact me at toby.lucich@insidesarbanesoxley.com for a more discrete point of contact. I would welcome discussion about what you love to deliver to a client, the type of challenge you would love to land next, and upcoming availability or opportunities. I look forward to discussions of areas of expertise (i.e. projects managed, cycles documented, processes redesigned, industry experience) as well as your level of interest in future projects (regionally within the US or on a global basis). Labels: consulting, implementation, independent, network, sarbanes oxley, sarbox, sox
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