Thursday, December 30, 2004

Sarbanes-Oxley: Corporate boon and bane

The past year has seen U.S. corporate culture come full-circle from the dark days of Enron out into the Sarbanes-Oxley sunshine, but not without some of the growing pains that come with such a dramatic metamorphosis.

The 2002 Sarbanes-Oxley Act was set up to pull down the last buffers between corporate executives and corporate financial responsibility. Now, CEOs and CFOs have to sign off on all company quarterly and yearly financial statements, directors have to come from outside the company, and companies have to do not only a comprehensive audit of their internal financial controls against fraud and other financial skullduggery, but must also have outside auditors evaluate the internal audit.

Although only public companies had to tighten up their financial controls, in the post-Enron environment, even private companies adopted SOX standards to shore up their reputations. But other private firms saw the cost of compliance as an obstacle to ever going public, while some public companies said that they were strongly considering "going dark" or delisting, a survey by Chicago-based law firm Foley and Lardner LLP showed.

Sarbanes-Oxley: Corporate boon and bane

Tell us what you think. (0) comments.
Send to a friend:

Compliance: Fear and loathing in 2004

This year, it's likely that IT managers would trade in all their holiday gifts to get the compliance grinches, I mean regulators, off their backs.

Compliance regulations such as the Health Insurance Portability and Accountability Act (HIPAA) for patient records and the Sarbanes-Oxley Act of 2002 (SOX) for financial records changed the way companies managed their data in 2004. Regulated companies spent a lot of time and money figuring out what data it had and what it needed to keep.

This led to confusion and anxiety because compliance language is not IT specific and better suited for lawyers and auditors. Many IT departments were left scratching their aching heads over compliance -- simply doing their best to manage, protect and archive their data.

But on the bright side, the effort to get compliant did help many IT departments put their shops in order and, in some cases, helped business and IT communicate better.

Compliance: Fear and loathing in 2004

Tell us what you think. (0) comments.
Send to a friend:

Monday, December 27, 2004

Corporate reform architect warns against convergence

The leading architect of European corporate governance reforms has warned against pushing cross-border convergence faster than the market dictates.

Jaap Winter, chairman of the high-level group of company law experts whose recommendations lie behind the European Commission's drive for better standards, said practices were changing “relatively fast”. He added: “In all member states things are happening, codes are produced, legislation is changed, boards are starting to operate differently.”

Scandals such as those at Parmalat, the Italian dairy company that collapsed under 14bn (pounds) ($19bn) of debt, Ahold, the Dutch retailer, and Royal Dutch/Shell's reserves debacle have given reforms fresh impetus. Mr Winter, a Dutch lawyer, said there was a “sense of urgency that things must be transparent, that conflicts of interest must be dealt with, that non-executives have a real role to play”.

He warned, however, that the objective should not be to force Europe's varied systems of finance, share ownership and governance to converge. “Convergence is OK where companies are operating under very similar circumstances. It should probably be stimulated but we should be sensitive to differences that still exist and are relevant. I don't think we should start pushing for convergence in those areas.”

Corporate reform architect warns against convergence

Tell us what you think. (0) comments.
Send to a friend:

Thank you, Sarbanes-Oxley

How's this for irony? Three auditors who lost their jobs when Arthur Andersen folded in the wake of the Enron scandal now find themselves up to their ears in work. They're auditing local businesses that are racing to meet Sarbanes-Oxley regulations devised to prevent another fraud like Enron.

But that's not all.

The co-founders named their San Jose firm Blueback, the nickname for the blue forms that Andersen's auditors used to detail their clients' accounting flaws.

And co-founder Kim Le's last name is pronounced ``Lay.'' That's right, like Ken Lay, Enron's deposed chief. (Who could blame her for telling people it sounds like snack-maker Frito-Lay instead?)

Le, 32, says she never considered leaving Andersen in the eight years she worked in its San Jose office. In the end, she had no choice. The crumbling accounting giant sold its audit arm while she was on maternity leave with her first child in 2002.

Thank you, Sarbanes-Oxley

Tell us what you think. (0) comments.
Send to a friend:

Firms See Profit Boon in Sarbanes-Oxley

Though Wall Street executives might bemoan a new set of accounting rules that go into effect next year, analysts on Thursday hailed the law responsible for them as a financial windfall for firms that will help corporate America come into compliance.

The Sarbanes-Oxley Act - created in 2002 to tighten corporate governance after the Enron debacle - has become a boon to the profits of a handful of firms that provide professional accounting and finance services.

One recent example of this is Resources Connection Inc., a Costa Mesa, Calif.-based company whose shares surged Thursday after it reported that second-quarter earnings leapt 233 percent from last year do to heavy demand for Sarbanes-Oxley compliance. The company posted earnings of $15.6 million, or 62 cents per share, up from $4.4 million, or 19 cents per share, in last year's second quarter.

"There are a lot of companies that found the time and cost of compliance to be greater than expected, but on the flipside (for) any professional services firm it has created a perfect storm of demand," said Resources Connection chief financial officer Stephen Giusto. "All of the big four firms are maxed out helping clients comply, we're busy helping clients comply, and it is still remarkable how many companies are still working very hard to complete their requirements."

Firms See Profit Boon in Sarbanes-Oxley

Tell us what you think. (0) comments.
Send to a friend:

Forbes.com: Sarbanes-Oxley Confessionals

Dedicated readers of The Wall Street Journal are used to the full-page notices addressed to shareholders that either polish someone's image or solicit their support in a battle for corporate control.

This Tuesday, however, a whole new type of notice appeared--this time with the unlikely sponsorship of PricewaterhouseCoopers. The notice bears the eye-catching caption, "Public Trust Is About To Be Tested Again." Now, anyone with more than ten cents in the market knows these are words that will get more than one investor's pulse rate rising (just think Enron and Worldcom). Add to this that the words are coming from the public's mainstay for trust--namely the company auditors--and you really wonder what's afoot.

The purpose of the notice is to warn investors that the Sarbanes-Oxley Act is about to drop the other shoe. Specifically, under Section 404 of the Act, independent accountants are required to give their opinion on whether the company has material control weaknesses, which "could" cause a misstatement of results in the annual, or interim, financial statements. This is required even if there is no evidence that such a misstatement has happened or will happen.

Forbes.com: Sarbanes-Oxley Confessionals

Tell us what you think. (0) comments.
Send to a friend:

Thursday, December 23, 2004

Sarbanes-Oxley Confessionals

Tell us what you think. (1) comments.
Send to a friend:

Wednesday, December 22, 2004

Security workers praise Sarbanes-Oxley

Many security workers feel that government regulations aimed at protecting IT networks from threats are working, according to new survey.

The survey, released Wednesday by security services company RedSiren, indicates that many IT professionals view security guidelines as work-intensive. But they also believe the regulations--such as the Sarbanes-Oxley Act, HIPAA (the Health Insurance Portability and Accountability Act) and the Gramm-Leach-Bliley Act--are making a difference.

Of the 300 IT professionals interviewed for the study, 66 percent agreed that the government regulations have improved the overall security of the networks they work on.

On the flip side, many of the people surveyed said the federal regulations eat up a bulk of their working hours, leaving less time for other security-related projects.

Sixty-two percent of respondents said they now spend more time complying with regulations than addressing other security-related matters, and more than 38 percent said this demanding work has caused them to scale back other IT security projects.

Security workers praise Sarbanes-Oxley

Tell us what you think. (0) comments.
Send to a friend:

Auditors Issue Joint Framework for Evaluating Internal Control Deficiencies

The nine firms issued version 3 of their framework for evaluating exceptions and deficiencies resulting from the evaluation of internal control over financial reporting. Version 3 of the framework has been expanded to cover the evaluation of deficiencies in pervasive controls other than information technology general controls and how to consider and evaluate deficiencies in the aggregate as well as incorporating the evaluation of process/transaction-level and information technology general control exceptions and deficiencies included in previous versions of the framework. The framework is designed for the use of issuers and auditors. This is to be the final update to the framework.

Auditors Issue Joint Framework for Evaluating Internal Control Deficiencies

Tell us what you think. (0) comments.
Send to a friend:

Tuesday, December 21, 2004

Diminishing Returns

Governance: Philosopher Frederic Bastiat famously observed that all economic actions have consequences seen and unseen -- as in those wrought by Sen. Paul Sarbanes and Rep. Michael Oxley. Sarbanes, D-Md., and Oxley, R-Ohio, authored the landmark 2002 legislation that seeks to bring more accountability to corporate governance after the Enron and WorldCom bankruptcies.

And judging from the dearth of recent scandals, as well as the howls from executive offices and boardrooms about costs of compliance, the statute is certainly having observable effects.

As for unintended consequences, most are still to be quantified. These include decisions deferred, risks not taken and investments not made for fear of running afoul of the law's onerous rules.

Some consequences are already clear -- as a recent decision by China's flagship airline illustrated. Due in part to what foreign firms view as Sarbanes-Oxley heavy-handedness, Air China came public not on America's premier exchange in New York, but on London's.

Until now, the NYSE has gotten more than its share of big China deals. Thirty companies based on the mainland or in Hong Kong and Taiwan now trade on the Big Board. Among them are three of the biggest IPOs in the last year or so -- China Life Insurance, China Netcom and Semiconductor Manufacturing International.

Air China's $1 billion offering was the first big China deal that the NYSE didn't land of late. A good question for Messrs. Sarbanes and Oxley, as well as other politicians eager to rein in business, is whether it will be the last.

Diminishing Returns

Tell us what you think. (0) comments.
Send to a friend:

SEC Rethinks Sarbox and Small Companies

The Securities and Exchange Commission is clearly sensitive to the plight of smaller companies that are struggling to comply with new corporate governance rules that apply to large and small companies alike.

Earlier this month the SEC gave many of these smaller companies an extra 45 days to meet a number of the requirements of Section 404 of the Sarbanes-Oxley Act, which guides how auditors report on companies' assessments of their internal controls.

Now the SEC has created an advisory committee to help examine the impact of that landmark legislation and other federal securities laws on smaller public companies. "The Sarbanes-Oxley Act has already been of enormous benefit to America's investors and markets and will spur further improvements," said SEC chairman William Donaldson. "Now the time is ripe to review how the act, including areas like internal control reporting, and other aspects of the SEC's regulations affect smaller companies."

SEC Rethinks Sarbox and Small Companies

Tell us what you think. (0) comments.
Send to a friend:

Survey Conducted by Jaeckle Fleischmann and Mugel Reveals That Not-for-Profits Have Begun Making Changes in Response to Sarbanes-Oxley

Jaeckle Fleischmann and Mugel, LLP, a law firm with offices in Buffalo, Rochester, Amherst and New York City, conducted a survey during the fourth quarter of 2004 of Directors and executive officers of not-for-profit organizations related to their corporate governance practices. The survey, conducted in light of proposals that have been made at both the federal and the state levels to significantly tighten the rules by which not-for-profits are governed and operated, was completed by over 100 not-for-profit organizations headquartered throughout New York State, with a significant number based in the New York City area.

Significantly, a total of 36% of respondents reported that their organizations have made changes in response to Sarbanes-Oxley with respect to their governance structures and policies. In addition, 35% of respondents indicated that they anticipate making future changes as a result of Sarbanes-Oxley. A copy of the full survey report can be found on the Firm's website at www.jaeckle.com. In response to the results described above, James J. Tanous, Chairman stated, "Even though Sarbanes-Oxley, for the most part, does not apply to not-for-profits, not-for-profits, as they should, are nevertheless beginning to take steps to comply with certain of its provisions. The changes we are seeing in the area of not-for-profit governance are a reflection of increasing sensitivity to the need for good governance in the wake of corporate scandals of recent years and the impact of the standards set forth in Sarbanes-Oxley."

In addition, the survey revealed significant findings with respect to the changes that not-for-profits have made in response to the two provisions of Sarbanes-Oxley that currently apply to not-for-profits: Section 802, which prohibits the destruction of documents under certain circumstances and Section 1107, which protects employees who report suspicious activities (i.e. whistleblowers). Not-for-profits should demonstrate compliance with these provisions by adopting records retention/document destruction and whistleblower policies. However, 61% of respondents reported that they still have no whistleblower policy and 30% reported they have no records retention or document destruction policy. In response to these results, Vincent P. Ravaschiere, Of Counsel to Jaeckle Fleischmann & Mugel stated, "As a best practice, not-for-profits should create and enforce document destruction and whistleblower policies. Doing so is a cost-effective way to ensure compliance with Sarbanes-Oxley."

Survey Conducted by Jaeckle Fleischmann & Mugel Reveals That Not-for-Profits Have Begun Making Changes in Response to Sarbanes-Oxley

Tell us what you think. (0) comments.
Send to a friend:

Corporate IT security takes off to address Sarbanes-Oxley, GLBA, HIPAA in '05

This year Sarbanes-Oxley, GLBA, HIPAA, accounting scandals, and Corporate Governance issues have increased concerns about liability in corporate America. This has sharpened the interest in security within both commercial companies and Government agencies. However, in 2005, it will be commercial corporations who take a fresh look at security issues.

The outgrowth of the new focus on limiting liability will translate into higher sales of security solutions outside of government, with a focus on following best-business practices for IT security, and on proven solutions. Security validations (such as Common Criteria and FIPS 140-2) will become increasingly important. New initiatives will develop that attempt to define measurable and testable requirements for meeting the IT security needs of HIPAA.

Corporate IT security takes off to address Sarbanes-Oxley, GLBA, HIPAA in '05

Tell us what you think. (0) comments.
Send to a friend:

BearingPoint Warns on Controls

A month after the departure of its chief financial officer, BearingPoint Inc. said in a regulatory filing that it may be unable to complete all of the work necessary to present its report on internal controls required by Section 404 of the Sarbanes-Oxley Act or to conclude that its internal controls are effective.

BearingPoint added that while it expects to complete its evaluation and testing of its internal controls by the time it must file its 10-K for the year ending December 31 — due no later than March 16, 2005 — if "we have any material weakness, we will not be permitted to conclude that our internal controls are effective."

Even if the company had time to take remedial actions that corrected the material weakness by year-end, BearingPoint added, the remediated controls would probably not be in operation long enough to allow its auditor, PricewaterhouseCoopers, to conclude that they are effective. That makes it likely that PwC will provide either an adverse or disclaimed audit opinion, added the consultancy.

BearingPoint Warns on Controls

Tell us what you think. (0) comments.
Send to a friend:

Deceit revealed in Japanese companies

An investigation by Japan's Financial Services Agency has found that one in 10 listed Japanese companies deceived investors in financial statements, undermining the credibility of Japan's stock market and denting the country's reputation as an international financial centre.

In response to the crisis, the FSA is considering new governance rules, based on the US Sarbanes-Oxley Act, which would force listed companies to spell out how they guard against wrongdoing. The rules could give Japan one of the toughest compliance regimes in the industrialised world but are likely to be resisted by companies because they would increase operating costs.

The FSA has suggested that executives be forced to document internal management controls, which could push many companies into updating or implementing compliance systems for the first time in years.

Deceit revealed in Japanese companies

Tell us what you think. (0) comments.
Send to a friend:

Monday, December 20, 2004

Life Support: Trapped like a rat

Has your company made you take a computer course in business integrity? If not, it probably will. It is mandated for many companies by a new federal law called the Sarbanes-Oxley Act, which arose in response to recent financial scandals. The theory behind the Sarbanes-Oxley Act appears to be that because CEOs are crooked, you need ethics lessons.

I have just finished taking mine here at The Washington Post. I passed. I thought I would give you a quickie instructional course in how to pass this sort of test, too.

Life Support: Trapped like a rat

Tell us what you think. (0) comments.
Send to a friend:

LaserCard Corporation Actively Seeking New Accounting Firm

LaserCard Corporation (NASDAQ:LCRD) today announced that it is actively seeking a new outside accounting firm in light of KPMG LLP's unexpected and sudden resignation on December 14, 2004. KPMG LLP informed LaserCard that it does not have the staff to provide services due to turnover and the unanticipated heavy workload for Sarbanes-Oxley 404 attestation work for large companies with fiscal years ending December 31. The company's fiscal year ends March 31st.

"We are obviously disappointed by KPMG's decision, but it appears that the Sarbanes-Oxley-related 45-day extension which the SEC recently granted to certain companies for internal control attestation resulted in a shortage of KPMG personnel resources available for a mid-sized company like us with a March 31 fiscal year-end," said Steve Larson, chief financial officer of LaserCard Corporation. "We are evaluating accounting firms and plan to make a decision on a successor shortly."

LaserCard has not yet decided whether to continue using KPMG Deutsche-Treuhand Gesellschaft to audit its German operations.

LaserCard Corporation Actively Seeking New Accounting Firm

Tell us what you think. (0) comments.
Send to a friend:

Sarbanes-Oxley Training Gets Web-Enabled

When KPMG established its 404 Institute (an extension of its Audit Institute) in September, its goal was to provide help for companies striving to meet the November 15 deadlines on financial reporting and internal controls under The Sarbanes-Oxley Act of 2002. Next, the 404 Institute launched and publicized its "Countdown to Compliance" program, designed to provide corporate executives with online resources to help meet these and other compliance deadlines.

In a fall Web survey, KPMG found that the main short-term compliance issue for responders was learning more about compliance needs, expectations and requirements. So, as part of the Countdown aimed especially at companies that close their books after November 15, the 404 Institute is hosting a series of educational and informational programs, including webcasts with recognized industry experts and Web-based presentations on compliance issues.

Implicit in the changes brought about by Sarbanes-Oxley is the time-pressured demand for knowledge of accounting and governance reforms for those required to respond to the regulations. Just in time, elearning has overcome some of its early technical and delivery obstacles, and education delivered electronically has become a crucial option for executives and directors hustling for learning the new guidelines in a hurry.

Sarbanes-Oxley Training Gets Web-Enabled

Tell us what you think. (0) comments.
Send to a friend:

Compliance: Fear and loathing in 2004

Tell us what you think. (0) comments.
Send to a friend:

MSNBC: Latest Sarbanes-Oxley requirement draws mixed reviews

Dave Johnson isn't convinced that the work required to comply with the Sarbanes-Oxley Act of 2002 is worth the cost or effort.

"It's a great deal of work" at both the corporate level and at Sypris Solutions Inc.'s subsidiaries, said Johnson, Sypris' chief financial officer. "It is quite onerous."

The requirements, more commonly known as Section 404 of the law, include establishing that a company has internal policies and procedures to guard against fraud and hiring an outside auditor to verify those findings.

Those safeguards are a potential benefit of the legislation because they could make publicly traded companies stronger. But executives and accountants who are knee-deep in compliance said they are unsure that the end justifies the means -- and the work that comes with it.

The Section 404 requirements take effect this year, meaning that officials at public companies with more than $75 million in market capitalization must sign documents saying that their internal controls are strong and have been tested with their first reports in 2005. Then, starting in 2005, executives at public companies below that threshold must make the same disclosures.

"My personal opinion is that the second wave of compliance will be better prepared than the first wave," said Neal Spencer, partner-in-charge of the Louisville/Southern Indiana region of BKD LLP, a Springfield, Mo.-based accounting firm. "This is so new to everybody, and there is not really any blueprint of how to do this."

MSNBC: Latest Sarbanes-Oxley requirement draws mixed reviews

Tell us what you think. (0) comments.
Send to a friend:

PCAOB to investigate KPMG audit

KPMG is reportedly being investigated by the Public Company Accounting Oversight Board into its audits of mortgage finance company Fannie Mae.

The investigation, according to the Financial Times newspaper, will examine whether the Big Four firm breached auditing rules in its work on Fannie Mae.

Fannie Mae is already under investigation by both the Justice Department and the Securities and Exchange Commission.

It faces a $9bn restatement following a Security and exchanges Commission ruling that it had violated accounting rules between 2001 and 2004.

PCAOB to investigate KPMG audit

Tell us what you think. (0) comments.
Send to a friend:

Sarbanes-Oxley Act Could Punish Executives

Thanks to a two-year-old corporate responsibility law, regulators and directors have powerful new tools at their disposal if their investigations uncover misconduct at Fannie Mae.

Congress passed the Sarbanes-Oxley Act of 2002 after top executives at scandal-ridden companies, including Enron Corp. and WorldCom Inc., said they were unfamiliar with the details of company accounting practices that resulted in devastating losses by investors.

The law requires chief executives and financial officers to certify the accuracy of corporate financial statements.

Officials who "willfully" sign off on faulty financial reports knowing they are incorrect could be sentenced to 20 years in prison and fined $5 million.

Sarbanes-Oxley Act Could Punish Executives

Tell us what you think. (0) comments.
Send to a friend:

PCAOB Said to Be Investigating KPMG Audit of Fannie Mae

The Public Company Accounting Oversight Board has reportedly opened an investigation into KPMG's audits of mortgage finance company Fannie Mae.

The board last week authorized its enforcement staff to scrutinize KPMG's work, according to a report by The Financial Times. The PCAOB investigation will reportedly look into whether the Big Four firm breached auditing rules in its work on Fannie Mae. KPMG became Fannie's auditor in 1969.

KPMG, through a spokesperson, declined to comment on the PCAOB investigation. A spokesman for the PCAOB said, "It would be inappropriate to comment on any action the PCAOB may or may not take regarding a specific company." Fannie Mae did not respond to a request for comment.

Fannie Mae, which is already under investigation by both the Justice Department and the Securities and Exchange Commission, also faces a possible $9 billion restatement following a review by the SEC that found that it violated accounting rules related to deferred purchase price adjustments and derivatives and hedging activities between 2001 and mid-2004.

PCAOB Said to Be Investigating KPMG Audit of Fannie Mae

Tell us what you think. (0) comments.
Send to a friend:

Reassuring Answers (washingtonpost.com)

After the disclosure of accounting problems at Freddie Mac last June, Fannie Mae chief executive Franklin D. Raines defended the company's practices in statements and answers to interviewers' questions.

Accurate Accounting: Should investors have confidence that they have your personal assurances?

"Well, they've got it in writing. That's one of the things that's happened now since the Sarbanes-Oxley Act that CFOs and CEOs have to personally certify to their financial statements. And so we go to a great effort to every quarter, to satisfy ourselves that we have in place the kinds of internal controls necessary to make that kind of certification."

Reassuring Answers (washingtonpost.com)

Tell us what you think. (0) comments.
Send to a friend:

Delistings soared in '03, study says

The number of companies that delisted common shares from exchanges nearly tripled in 2003, according to a study that suggests many companies did so to avoid increased outside scrutiny.

About 198 firms delisted their shares from exchanges, or "went dark," in 2003, up from 67 in 2002, according to the study co-authored by professors from the Wharton School of the University of Pennsylvania and the University of Maryland's Robert H. Smith School of Business. The study was summarized in a Wharton newsletter.

The study reported that most of the companies that delisted their shares say they did so to escape the steep costs associated with regulatory filings. Many smaller companies estimated the cost of complying with Sarbanes-Oxley was as high as $500,000.

Delistings soared in '03, study says

Tell us what you think. (0) comments.
Send to a friend:

Saturday, December 18, 2004

BearingPoint Warns of Continued Turmoil, Acknowledges Subpoena

BearingPoint Inc. disclosed more troubles yesterday, saying that it will take a restructuring charge of as much as $67 million and may not be able to report that it has adequate procedures in place to prevent accounting fraud.

The "dilutive event raises concerns that the business maybe more troubled than previously thought," said analysts from Wachovia Securities, which downgraded the company's stock to "underperform" yesterday.

The offering is intended to give BearingPoint more liquidity, said Paul Hsi, an analyst with Moody's Investors Service. But, he added, it will also increase its overall debt.

"We've been tracking it very closely and have been sort of disappointed in terms of their ability to hit our expectations," Hsi said of the company.

The offering would reduce the chances that BearingPoint might be declared in default of existing credit agreements. A default would be triggered if the company failed to file an audited financial statement, which might occur if it is unable to meet financial accounting standards under the Sarbanes-Oxley Act. The act requires companies to certify that they have adequate accounting controls in place to prevent fraud. BearingPoint said it found a "material weakness" in its accounting procedures as recently as Nov. 19, and will likely find at least one more by the end of the year.

BearingPoint warned that even if it does implement changes, "it seems clear that there will be insufficient time" for the company's independent accountants to conclude that the new procedures are working and sign off on its financials.

BearingPoint Warns of Continued Turmoil, Acknowledges Subpoena

Tell us what you think. (0) comments.
Send to a friend:

Friday, December 17, 2004

White Paper: Ensure business controls and regulatory compliance

IT service level management has shifted from being an eventual goal to being a business requirement. Under the Sarbanes-Oxley Act, companies must ensure their business controls can both operate efficiently and meet risk effectively. HP can help you bring customer service management strategies up to the exacting standards required in an environment where IT services are both complex and critical to the business. HP presents a practical approach to Sarbanes-Oxley compliance in our white paper offered below.

Register with HP to access the white paper entitled, "HP IT Service Management and HP OpenView: An approach to attaining Sarbanes-Oxley compliance." This white paper will explain how HP OpenView and HP ITSM combined with the structural frameworks of COSO and COBIT, can assist companies both in attaining Sarbanes-Oxley compliance and achieving key business objectives.

White Paper: Ensure business controls and regulatory compliance

Tell us what you think. (0) comments.
Send to a friend:

Balance Sheet: The limits of expertise

So, without further ado: What anxieties can investors expect to surface as they seek information and assurance to aid their decisions? And if those concerns are as legitimate and well-grounded as they seem, then whose responsibility is it to allay them?

On the regulatory side, questions of efficacy persist - for example, on the likelihood that the reports by corporate management on internal controls, under section 404 of the Sarbanes-Oxley law, will add anything other than extra cost to the quality of corporate governance.

The U.S. Securities and Exchange Commission recently decided to grant smaller listed companies a 45-day extension on compliance, a gesture that will be of little value, since under existing law any control problems amounting to a "material weakness" - that is, big enough to matter - must already be disclosed, addressed and resolved.

More directly, ominous warnings resound about the prospects of a U.S. government bailout of the mortgage finance duo Fannie Mae and Freddie Mac, under fire for the application of their accounting policies. There are also alarms sounding about the very solvency of the Pension Benefit Guaranty Corp., whose obligations to stand behind the system of private pensions are about to be overwhelmed under the bankruptcy effects of the U.S. airlines.

Not only investors, lenders and business partners, but also employees, pensioners and home borrowers have delegated portions of their personal risk assessment to these third-party sources of assurance.

Balance Sheet: The limits of expertise

Tell us what you think. (0) comments.
Send to a friend:

Nicolet decides to privatize

Green Bay-based Nicolet Bankshares Inc. said it plans to go private to save as much as $400,000 a year in government compliance costs, according to securities documents filed Friday.

Nicolet is at least the third bank holding company in Wisconsin this year to make such a move in order to avoid paying the additional costs of complying with Sarbanes-Oxley Act requirements. The law, passed after accounting fraud led to the collapse of Enron Corp. and other companies, hits small companies particularly hard, according to its critics.

Many other small companies probably are looking at going private, said one corporate securities lawyer.

“If they’re not looking at that possibility, I’d be surprised,” said Steven R. Barth at Milwaukee-based Foley & Lardner LLP.

Nicolet and the other banking companies that are going private - First Banking Center Inc. in Burlington and Blackhawk Bancorp Inc. in Beloit - are trying to reduce their shareholder roles below 300 so they do not have to be registered with the Securities and Exchange Commission.

Nicolet decides to privatize

Tell us what you think. (0) comments.
Send to a friend:

SEC looks again at Sarbanes-Oxley rules

US regulators are to consider how they can write specific rules for smaller public companies following a wave of complaints about the costs associated with the Sarbanes-Oxley legislation.

The Securities and Exchange Commission on Thursday announced the establishment of a taskforce that will make recommendations on how the SEC could write rules that differentiate between big and smaller listed companies.

The intensive drive to reduce red tape for smaller companies will focus on whether they should abide by distinct rules in four areas. These are corporate governance, financial reporting, internal controls and stock offerings.

The SEC has produced many rules to implement the 2002 Sarbanes-Oxley law on corporate governance and accounting, which was drawn up after the Enron and WorldCom scandals and makes no distinction between big and smaller companies.

The most expensive provision is section 404 of the legislation, and its stipulation that companies document and test their internal controls against fraud.

The SEC insisted it was not seeking to roll back Sarbanes-Oxley and other securities laws, but would look at whether the rules it devises pursuant to legislation can be tailored for smaller companies.

SEC looks again at Sarbanes-Oxley rules

Tell us what you think. (0) comments.
Send to a friend:

SEC lauded for Sarbanes-Oxley review

The technology industry is lauding plans by the Securities and Exchange Commission to examine of the impact of the Sarbanes-Oxley law. The Federal Accounting Standards Board Thursday issued its long-expected rules requiring public companies that award stock options to employees to categorize the value of those options as an expense, a move that would affect the company's bottom line.

But on the heels of that decision the SEC announced that it would appoint an advisory committee to help the commission examine the impact of the Sarbanes-Oxley Act and other aspects of the federal securities laws on smaller public companies.

"Now the time is ripe to review how the Act, including areas like internal control reporting, and other aspects of the SEC's regulations affect smaller companies," SEC Chairman William Donaldson said.

SEC lauded for Sarbanes-Oxley review

Tell us what you think. (0) comments.
Send to a friend:

Shortage of Accountants Leads to New Recruiting Strategies

Accounting firms are resorting to all forms of recruitment to keep up with the workload stemming from the Sarbanes-Oxley Act of 2002, which was passed to clean up corporate America in the wake of meltdowns at Enron, WorldCom and others.
Charles Swanson, director of Ernst & Young's oil and gas practice in the Americas, has witnessed first-hand how far some companies will go to recruit new accountants. He has heard of firms calling up retired accountants, or recruiting former auditors who have moved to other career fields, the Houston Chronicle reported.

Swanson saw the extreme when he saw people at a downtown lunch spot sporting T-shirts that said, "If you're an accountant, ask me about a job opportunity."

"We never figured out who was doing it, but we were tempted to lock all our employees inside that day," Swanson told the Chronicle.

Shortage of Accountants Leads to New Recruiting Strategies

Tell us what you think. (0) comments.
Send to a friend:

Disaffected Greenbrier director assails company's audit conduct

Alan James, the former chairman and current director of The Greenbrier Cos. Inc. who is feuding with fellow board members, accused the railcar maker this week of violating federal corporate accountability laws.

James alleged in a Monday, Dec. 13, letter to the Lake Oswego-based company that its audit committee violated the Sarbanes-Oxley Act by using its longtime outside counsel and company secretary, Kenneth D. Stephens, to audit the company's European operations for possible accounting irregularities.

James wrote that under the 2002 law the company should have hired an independent outside lawyer to investigate the alleged improprieties.

James, who has requested two inquiries into the accounting of the company's European operations in the past two years, said the resulting audit committee report was given to company auditors with false and misleading statements, and material omissions.

Greenbrier, which disclosed James' allegations Thursday in a prepared statement, said the charges "are without merit." The company said it "stands firmly" behind its financial records and that the audit committee review found "no unusual or unacceptable practices."

The company called James a "dissident shareholder" whose views have "grown out of harmony" with the rest of the company's board.

Disaffected Greenbrier director assails company's audit conduct

Tell us what you think. (0) comments.
Send to a friend:

Report: Snow wants balanced Sarbanes-Oxley enforcement

Treasury Secretary John Snow calls Sarbanes-Oxley Act 'essential' but wants to avoid criminalizing mistakes. Snow said "appropriate, measured balance" is needed when enforcing the Sarbanes-Oxley Act, the most significant revision of U.S. securities law since the 1930s, the Wall Street Journal reported Friday.

In an interview with the Journal, Snow said, "We don't want to criminalize mistakes. Getting the right balance there... is a very serious public policy issue, and failure to get the balance right has extraordinarily negative long-term economic consequences."

He added that Sarbanes-Oxley is "absolutely essential" and requires no "major modifications," according to the newspaper.

Report: Snow wants balanced Sarbanes-Oxley enforcement

Tell us what you think. (0) comments.
Send to a friend:

SEC's Nicolaisen Welcomes PCAOB Involvement in Independence Standards-Setting

In response to the Public Company Accounting Oversight Board (PCAOB) action earlier this week, proposing certain ethics and independence rules for public comment, the Commission’s Chief Accountant, Donald T. Nicolaisen, noted that he welcomed PCAOB involvement in this important area.

The PCAOB’s proposed rules grew out of its public roundtable on auditor independence held in July, and address issues relating to tax services and contingent fees.

"It’s appropriate that the PCAOB play a robust role in the area of auditor independence," Nicolaisen stated. "Since the passage of the Sarbanes-Oxley Act in 2002, there have been many questions about the types of services auditors may provide without compromising their independence, especially with respect to tax services. PCAOB guidance in this area will be helpful to audit committees, in particular, as they consider these issues."

SEC's Nicolaisen Welcomes PCAOB Involvement in Independence Standards-Setting

Tell us what you think. (0) comments.
Send to a friend:

Silicon Valley loses fight on stock options: Companies must deduct perk's value when figuring profit

In July, the House voted 312-111 to pre-empt the widely expected FASB rule by limiting the disclosure requirement to options given to a company's top five executives. That bill died when the Senate refused to take it up.

FASB supporters say that not only is the accounting board right on the merits, but this time, the bookkeeper group has the upper hand, said Pat McGurn, a consultant with Institutional Shareholder Services, a Maryland firm that advises pension fund managers.

When FASB tried to push through an options-expensing rule in 1994, it had to back down after the Senate passed a resolution that effectively threatened to strip the body of its source of income, McGurn said.

But the Sarbanes-Oxley reform bill that was passed in the wake of the recent corporate scandals gave FASB independent financial support. That has stiffened the accounting board's resolve, McGurn said.

While the House is supporting high-tech firms, FASB has the staunch backing of Sen. Richard Shelby, R-Ala., chairman of the Senate Banking Committee.

"Sen. Shelby has worked hard in the past to insure that Congress did not interfere with this process, and he is committed to insuring that this does not occur in the future,'' Shelby spokesman Andrew Gray said Thursday.

Silicon Valley loses fight on stock options: Companies must deduct perk's value when figuring profit

Tell us what you think. (0) comments.
Send to a friend:

Auditors: The Leash Gets Shorter

For years, Sun Microsystems Inc. (SUNW ) looked to its auditor, Ernst & Young International, to provide all manner of advice on other financial matters. But recently the Santa Clara (Calif.) high-tech company has started to shop elsewhere. PricewaterhouseCoopers now handles Sun's internal audit, KPMG International helps test financial controls, and Deloitte Touche Tohmatsu prepares tax returns for Sun's expatriate employees. With new federal rules beefing up the audit process, "it's our firm belief that [Ernst & Young] should focus specifically on the audit," says Stephen T. McGowan, Sun's chief financial officer.

Sun is not alone. After auditors failed to catch financial fraud at Enron and WorldCom (now MCI), Congress ordered companies to quit hiring their auditors for a slew of services, from bookkeeping to computer-systems design. The 2002 Sarbanes-Oxley corporate-reform act left it up to boards' audit committees to decide whether the same accounting firm could provide other services -- including tax advice. But with audit committees eager to avoid any chance for conflicts, more companies, from General Electric to Home Depot to American Express, are switching their tax work, too.

Now they have another reason to play it safe. On Dec. 14, the Public Company Accounting Oversight Board proposed stricter curbs on audit firms selling tax services to their clients. The board, created by Sarbanes-Oxley, says it wants to ban auditors from promoting aggressive tax shelters to client companies and their top execs. It also wants to keep them from accepting contingent fees, payments based on a percentage of their clients' tax savings. Also off limits: offering tax services to top company officers. The rules, which must be approved by the Securities & Exchange Commission, "draw clear lines to distinguish inappropriate services that impair auditor independence from permissible services that are not detrimental," says PCAOB Chairman William J. McDonough.

Auditors: The Leash Gets Shorter

Tell us what you think. (0) comments.
Send to a friend:

Cos. Outsourcing Finance Functions Experience More Control over Governance, Security than Expected

Concerns that the outsourcing of finance and accounting functions impedes the ability to control key processes related to compliance and governance appear to have abated, according to a survey commissioned by Accenture.

Among 203 executives surveyed by the Economist Intelligence Unit, nearly 60 percent now believe that the outsourcing of finance functions enhances the ability to adhere with compliance regulations such as Sarbanes-Oxley. And more than half believe that outsourcing alleviates the burden of staying on top of frequent changes to tax codes and accounting rules, while also providing an increased level of information transparency, visibility of controls and clarity of accountability.

Almost 60 percent of respondents agree that outsourcing increases the rigor of business processes, because they are better documented, according to Accenture.

"Executives increasingly believe that outsourcing can happily co-exist with today's greater emphasis on governance," said Stewart Clements, president of Accenture Finance Solutions. "We believe that this significant shift in attitude stems from results achieved by companies that have already outsourced their finance functions."

Cos. Outsourcing Finance Functions Experience More Control over Governance, Security than Expected

Tell us what you think. (0) comments.
Send to a friend:

Security and Sarbanes Oxley

The essential first step in effective information security for Sarbanes-Oxley is that a risk assessment methodology be used to make informed security investment decisions. If a company has not conducted a risk assessment, it cannot know the extent of its security problem. Even when it knows the extent of security and cybersecurity needs, it cannot protect everything.

On the basis of the results of a risk assessment, infrastructure changes can be adopted to mitigate identified risks. These can be highly individualized since there are several categories of cybersecurity technologies available that could be used to better secure critical infrastructure systems. However, it is also important the company keep in mind the limitations of these technologies, as well as the interactions of the technologies with the security processes and the people using the technologies.

Security and Sarbanes Oxley

Tell us what you think. (0) comments.
Send to a friend:

Fuzzy Math

The federal budget is a bizarre mess, with unique bookkeeping practices that make it almost impossible for an outsider—or even most insiders—to figure out what's really going on. If corporations produced numbers like these, jail cells would be filled with CEOs. But Washington doesn't impose laws like Sarbanes-Oxley reform legislation on itself. It does whatever it wants.

So I love the debate about proposals to "reform" federal budget accounting to ignore the impact of proposed Social Security personal accounts. As you know, the argument is that letting people set up personal accounts is actually a federal investment, not an expense, because the accounts let government save money in the long run by reducing future Social Security expenditures.

Fuzzy Math

Tell us what you think. (0) comments.
Send to a friend:

Thursday, December 16, 2004

Snow wants measured Sarbanes-Oxley enforcement-WSJ

Treasury Secretary John Snow said "appropriate, measured balance" is needed when enforcing the Sarbanes-Oxley Act, the most significant revision of U.S. securities law since the 1930s, the Wall Street Journal reported on Friday.

In an interview with the Journal, Snow said, "We don't want to criminalize mistakes. Getting the right balance there... is a very serious public policy issue, and failure to get the balance right has extraordinarily negative long-term economic consequences."

He added that Sarbanes-Oxley is "absolutely essential" and requires no "major modifications," according to the newspaper.

"I think regulators, government officials, U.S. attorneys -- all of us who have a role in administering the oversight system for corporate governance -- have to be cognizant of the need for appropriate, measured balance here," Snow told the Journal.

Snow wants measured Sarbanes-Oxley enforcement-WSJ

Tell us what you think. (0) comments.
Send to a friend:

Slate: The global economy thrives without the United States

Our financial markets have long been the envy of the world, despite their many flaws. But foreign companies now want out of them. The FT has run a series of stories hinting that European companies are really cheesed off by the requirements imposed upon them by Sarbanes-Oxley. Apparently, "the majority of German companies with U.S. stock market listings would like to get out of New York to avoid the cost and hassle of complying with the U.S. regulatory regime."

Young foreign wannabe executives are shunning the United States. Business Week earlier this year lamented the "staggering" declines in applications of foreigners to U.S. business schools—down 24 percent at Wharton in 2004. According to the Graduate Management Admission Council's four-year trend, the number of foreigners taking the GMAT has fallen 27 percent since 2002, and this detailed report (see Fig. 9 on Page 13) shows that 74 percent of the schools in the survey saw declines in international applications in 2004. Thanks in part to the sharp reductions in the availability of H1-B visas—from about 200,000 in fiscal 2001 to about 65,000 this year—legions of skilled foreigners now ply their trades at home, or in other countries, instead of helping to build businesses here.

Slate: The global economy thrives without the United States

Tell us what you think. (0) comments.
Send to a friend:

NevOn: Delisting in the US because of Sarbanes-Oxley

The costs of compliance with the Sarbanes-Oxley Act are leading some international companies to delist in the US, with others not bothering to apply for stock market listing.

A report yesterday in Business Week Online said that the tough corporate-reporting regulations passed in the US in 2002 after the wave of financial scandals have many American companies scrambling to comply with the new requirements. But in Europe, they're provoking a slightly different reaction.

Financial-management consultancy Parson Consulting estimates that complying with Sarbanes-Oxley would cost the 70 British-headquartered businesses included in their survey a total of $860 million. Another survey of corporate board members conducted by executive-search firm Korn/Ferry International estimates that complying would cost the US companies surveyed an average of $5.1 million.

NevOn: Delisting in the US because of Sarbanes-Oxley

Tell us what you think. (0) comments.
Send to a friend:

Silicon Valley Watcher: Great, all that work for nothing much---SOX compliance will do little to shield shareholders from losses says Booz Allen study

Analysis of the performance of 1,200 $1 billion market cap companies over a five-year period has found that Sarbanes-Oxley compliance systems will not shield companies from a seven-times higher risk of losses from normal competitive blunders.

Silicon Valley Watcher: Great, all that work for nothing much---SOX compliance will do little to shield shareholders from losses says Booz Allen study

Tell us what you think. (0) comments.
Send to a friend:

SEC looks again at Sarbanes-Oxley rules

Tell us what you think. (0) comments.
Send to a friend:

Sarbanes-Oxley a challenge for many smaller companies

Many large public companies have complied with a major provision of the Sarbanes-Oxley Act, while smaller ones are struggling and have sought deadline extensions, officials say.

Virtually all -- 99 percent -- of the large U.S. companies that responded to a survey released last month by Los Angeles executive search company Korn/Ferry International had already met a key deadline outlined in Section 404 of the act. For most of the 800 Fortune 1,000 companies that responded to the survey, that deadline was Nov. 15.

The average cost for these large companies to comply was $5.1 million, according to the survey. Ongoing compliance costs will average $3.7 million annually, the survey found.

Sarbanes-Oxley a challenge for many smaller companies

Tell us what you think. (0) comments.
Send to a friend:

London Poised to Take on Big Apple IPOs (Free registration required)

The initial public offering of China's flagship airline, Air China, this week on the London Stock Exchange could be a harbinger of emerging companies going to the City rather than Wall Street to raise capital.

While Air China was only the fifth Chinese company to list shares in London, and one of 10 emerging markets IPOs in 2004, bankers and consultants say 2005 will be a banner year for IPOs in London, because the U.S. regulatory regime is too onerous for many eastern European and Asian companies.

"We expect several more emerging markets IPOs in London," said Tony Fry, a partner with consultancy KPMG.

For years London has vied, with limited success, with New York for foreign companies that crave the veneer of corporate respectability that a listing on a major exchange can offer.

But the combination of new corporate governance rules as defined by the Sarbanes-Oxley Act and what is perceived as the insular nature of the U.S. markets has pushed some foreign companies to turn to London.

London Poised to Take on Big Apple IPOs (Free registration required)

Tell us what you think. (0) comments.
Send to a friend:

SEC to study small companies' Sarbanes-Oxley costs

A panel to examine whether small public companies are being forced to bear exorbitant costs to meet corporate reforms enacted in 2002 was announced by the U.S. Securities and Exchange Commission on Thursday.

Companies have complained that the Sarbanes-Oxley Act imposes excessive requirements for corporate disclosure, maintaining internal controls over financial reporting, and access to capital markets, areas on which the new panel may recommend rule changes.

The panel will be co-chaired by attorney Herbert Wander of Katten Muchin Zavis Rosenman, and James Thyen, president and chief executive officer of Kimball International Inc. (KBALB.O) , an Indiana-based furniture and electronics maker.

SEC to study small companies' Sarbanes-Oxley costs

Tell us what you think. (0) comments.
Send to a friend:

Line56.com: The Strategy of Controls

Yesterday, a survey showed that Sarbanes-Oxley (SOX) laws are both beneficial and expensive. Today it's time to understand how companies, particularly larger enterprises, can use the systems and processes set up for SOX compliance to generate strategic value and make the benefits outweigh the expenses.

The past several months of SOX activity have been a fire drill. As in the case of other mandates, the first stage has been for impacted companies to comply with the letter of the law, and in the case of SOX this has meant setting up a secure, documented, and accountability-laced control and monitoring regime around financials and related data.

Think of it this way: every controls issue can impact any other area of the business. It isn't just about preventing fraud. If employees bypass existing controls in order to approve their own purchases, the enterprise might have a maverick spending problem. If an employee adds an identifying suffix to a purchase order transaction, the enterprise might develop a duplicate records problem.

Line56.com: The Strategy of Controls

Tell us what you think. (0) comments.
Send to a friend:

Sarbox and BPO Present Problems

Enterprises should take a conservative approach when determining whether or not an outsourced process complies with all Sarbox stipulations, recommends Meta Group's Stan Lepeak. Executives should be clear about what represents a best-faith effort to accomplish compliance.

The Sarbanes-Oxley Act presents new and stringent requirements for how enterprises document particular business processes -- especially those related to financial reporting. At the same time, a new trend is underway to send whole business processes out to third parties to execute, while the enterprise spends its time and energy on core competencies.

How do the two issues mix? Not very well, according to research by the Meta Group . In fact, the uncertainty surrounding how BPO (business process outsourcing) and Sarbox relate will hinder BPO adoption for some time, predicts Meta's Stan Lepeak.

Sarbox and BPO Present Problems

Tell us what you think. (0) comments.
Send to a friend:

Sarbanes-Oxley: Killing Enterprise to Save It

In reaction to corporate scandals, greed, failure, and fraud, Congress in July 2002 passed the Sarbanes-Oxley Corporate Reform Act, named after Sen. Paul Sarbanes (Democrat, Maryland), at the time chairman of the Banking, Housing and Urban Affairs Committee) and Rep. Michael Oxley (Republican, Ohio) to more strictly regulate corporate accounting. But this law has created awful costs that far exceed the benefits, and which have hampered the economic recovery and have contributed to slow employment growth.

Only a few corporations committed deceptive accounting and engaged in and aided a massive looting of shareholder assets. Sarbanes-Oxley is an over-reaction that illustrates the basic problem of regulation: all are required to incur great costs to fix the problems caused by a few. The law requires 12,000 firms to file complex financial statements with the Securities and Exchange Commission. It's like the smog tests required of car owners in most states, where millions of car owners have to incur an expense even though only a small proportion of the cars cause most of the pollution.

The total compliance cost in terms of money spent is over $5.5 billion per year. Much of the cost is passed on to consumers, which then reduces sales, and some is borne by the investors, stifling the expansion of the company. That does not take into account the much greater cost to the economy of enterprises not expanding or starting, because "Sarbox" makes it too costly.

Foldvary: Sarbanes-Oxley: Killing Enterprise to Save It

Send to a friend:

TEOCO receives coveted SAS 70 Type II Certification – meets highest level security requirements (PDF)

TEOCO (The Employee Owned Company) announced today that its BillTrak Pro Application Service Platform (ASP) and Outsource Services have successfully completed a Statement on Auditing Standards No. 70 Type II “Audit” performed by a nationally recognized accounting firm.

Independent auditors KPMG conducted the certification which has become more and more important with the recent passage of Sarbanes – Oxley legislation. TEOCO was able to meet the requirements of the SAS 70 Type II audit, which places the highest level of scrutiny on the company’s processes, procedures and general controls.

"We are extremely proud to have completed this rigorous and thorough certification process," says Atul Jain, Chairman and CEO of TEOCO Corporation. "With the completion of this audit, our customers can be assured that our products and services are not only safe and reliable but enable them to meet the requirements imposed by Sarbanes – Oxley legislation."

TEOCO receives coveted SAS 70 Type II Certification – meets highest level security requirements (PDF)

Tell us what you think. (0) comments.
Send to a friend:

It's Time to Take Your SOX Off

To protect shareholder value, companies must link risk management with strategic planning and avoid overreacting to regulatory compliance mandates.

Here’s a fact that bucks conventional wisdom: More shareholder value has been wiped out in the past five years as a result of mismanagement and bad execution of strategy than was lost because of all of the recent compliance scandals combined. This is a key finding of a recent Booz Allen Hamilton survey and analysis of the performance of 1,200 firms with market capitalizations of more than $1 billion for the five-year period from 1999 through 2003.

Consider the 360 worst financial laggards. Eighty-seven percent of the value lost by these firms was attributable to strategic missteps — management ineffectiveness in reacting to competitive pressures or forecasting customer demand — and operational blunders, such as cost overruns and M&A integration problems. Only 13 percent of the value destruction suffered by these companies was caused by regulatory compliance failures or was a result of poor oversight of company operations by corporate boards.

It's Time to Take Your SOX Off

Tell us what you think. (0) comments.
Send to a friend:

Will Merger Mania Extend to 2005?

PwC's Bob Filek noted that as M&A financing sources chase yields and try to beat their benchmarks, they've been willing to go into lower-quality issues and take on longer maturities. "Executives will also be shifting their focus from Sarbanes-Oxley compliance matters to growth and acquisitions," he added.

The deal drivers in 2005 figure to be cost and growth, added PwC. Greg Peterson, a transaction-services partner focused on the private equity sector, says buyers are asking, "How can we improve the cost structure, and once we do that, what's the upside growth potential?" The upshot: Deals that don't offer growth potential won't get done, despite cost savings. That's true for both the corporate side as well as the private equity side.

Will Merger Mania Extend to 2005?

Tell us what you think. (0) comments.
Send to a friend:

Wednesday, December 15, 2004

Companies 'going dark' lose value

Companies that sought to escape the compliance costs associated with the Sarbanes-Oxley law saw their stock prices fall by more than 10 per cent in the immediate aftermath, says an academic study.

The research by Pennsylvania and Maryland universities highlights how investors react badly to public companies that disclose plans to free themselves of financial reporting obligations made more onerous by Sarbanes-Oxley.

It concludes that the 2002 law, supposed to give investors more reliable financial information, may be having the "perverse effect" of damaging transparency.

The study says the law may be prompting managers of troubled companies to seek to end their reporting obligations.

It also raises questions for European and Asian companies with US share listings that are pressing the SEC for an easing of their reporting obligations because of the Sarbanes-Oxley law.

Companies 'going dark' lose value

Tell us what you think. (0) comments.
Send to a friend:

Business Groups Begin Quiet Campaign to Oust SEC's Donaldson

The Business Roundtable, the U.S. Chamber of Commerce, the National Association of Wholesaler-Distributors played a critical role in reelecting President Bush. Now the groups are part of a quiet effort to convince the President that it's time for a new Securities and Exchange Commission chair, the Wall Street Journal reported.

Believing the post-Enron reforms have led to a strangled business environment, in part because of the greater authority given to the SEC by the Sarbanes-Oxley corporate reform legislation. The Journal reported that the groups believe the reform effort has gone to far and threatens to hamper the economy by discouraging corporate risk taking.

They seek an SEC chair who understands the challenges faced by executives and their boards. They claim the current chairman, William Donaldson, does not understand their concerns.

Since Donaldson is a close friend of the Bush family and was appointed chairman two years ago by President Bush, efforts to oust him are expected to be quiet, the Journal reported, predicting his possible departure early next year.

Business Groups Begin Quiet Campaign to Oust SEC's Donaldson

Tell us what you think. (0) comments.
Send to a friend:

CFOs Upbeat on Economy; Expect Jump in Capital, Tech Spending

When asked about permanent changes resulting from Sarbanes-Oxley Section 404 relating to the testing and reporting of internal audit controls, 30 percent of CFOs cited better control over documentation of systems changes, while 21 percent said that they had invested in a technology solution to monitor compliance and maintain and store internal control documentation. More than half (57 percent) said that they had made "no substantive changes," according to FEI and Baruch.

Interestingly, a significant number of CFOs are expecting a greater increase than the markets are. About one in three CFOs said that the futures markets -- which have been assuming that the Libor rate will rise to 3.36 percent in the next 12 months -- are underestimating the rise, while just over half of the respondents thought this rise is "just about right." Burton Rothberg, assistant accounting professor at Baruch, noted that in the last two quarters, the CFOs surveyed have correctly predicted that futures markets were overestimating future increases in interest rates.

CFOs Upbeat on Economy; Expect Jump in Capital, Tech Spending

Tell us what you think. (0) comments.
Send to a friend: