Thursday, June 30, 2005

How To Dig Out From Under Sarbanes-Oxley

The dirty little secret of the first Sarbanes-Oxley audit is that no one really knew what they were doing. Not the auditors, not the consultants, not you.

For Al Schmidt, vice president of IT for Arch Chemicals, that became painfully obvious during a September 2004 meeting in which his internal auditor, PricewaterhouseCoopers (PWC), and his external auditor, KPMG, discussed...auditing standards. (Sarbanes-Oxley mandates that companies have different internal and external auditors to avoid Enron-like conflicts of interest.)

How To Dig Out From Under Sarbanes-Oxley

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You Can't Have a "Free-for-All"

Soft-spoken he may be, but there was nothing quiet about the way William H. Donaldson left the Securities & Exchange Commission. On June 29, one day before his planned retirement, the 74-year-old Wall Street veteran pushed through a controversial mutual-fund rule -- acting just a week after a federal appeals court said the agency hadn't adequately considered the rule's costs or alternatives.

You Can't Have a "Free-for-All"

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Wednesday, June 29, 2005

Anti-fraud law fails first major court test

The acquittal of HealthSouth founder Richard Scrushy Tuesday represents a high-profile failure for the Sarbanes-Oxley Act, the comprehensive set of rules established by Congress three years ago in response to a wave of corporate scandals.

Even before the verdict was announced in Birmingham, Ala., the law was getting mixed reviews from companies, lawyers and shareholders. While most agree Sarbanes-Oxley has helped restore investor confidence in corporate accounting, companies have complained that the benefits of the new regulations are not worth the cost of complying with them.

Anti-fraud law fails first major court test

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Scrushy Acquitted of Fraud at HealthSouth

Jurors who acquitted Richard Scrushy of directing the massive earnings overstatement at HealthSouth Corp. didn't buy much of a prosecution case that outside the jury box many thought was nearly airtight.

All five of the former HealthSouth finance chiefs who took the stand to implicate Scrushy in the fraud had credibility problems, according to jurors who agreed to talk with reporters after the verdict on Tuesday.

Scrushy Acquitted of Fraud at HealthSouth

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Monday, June 27, 2005

PwC: Private Companies Applying SOX Principles as Best Practice

Private companies that are voluntarily involved in Sarbanes-Oxley-related initiatives see them primarily as a "best business practice" and a means to head-off future or potential problems -- not necessarily a method for solving current problems.

Three in 10 fast-growing private companies are looking to benefit from provisions of the Sarbanes-Oxley Act. As they and others decide which aspects of the Act are appropriate for them, they must ask themselves two fundamental questions: Will adoption of those elements make a better company? Do the benefits outweigh the costs?

PwC: Private Companies Applying SOX Principles as Best Practice

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GM won't let execs trade stock

General Motors (GM) has indefinitely barred most senior executives and other employees with access to internal financial information from buying or selling company stock and has taken steps to limit the disclosure of such information.

The unusual move follows the Detroit automaker's decision to suspend profit guidance to Wall Street in April amid uncertainty about the company's financial future.

The ban is intended to prevent GM insiders from inadvertently engaging in illegal insider trading based on information that is not publicly available.

GM won't let execs trade stock

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HealthSouth restates 2000, 2001 finances

HealthSouth Corp. restated its finances for the final years of a huge fraud on Monday and said it hoped to be current on its financial statements by the end of 2005.

In a 170-page filing with the Securities and Exchange Commission that included an additional 114 pages of notes, HealthSouth said actual revenues in 2000 and 2001 were $7.1 billion — some $1.5 billion less than previously reported.

HealthSouth restates 2000, 2001 finances

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Saturday, June 25, 2005

Kozlowski Blames Accountants For Excesses and Oversights

Although they are free on bail for the moment, former Tyco International CEO Dennis Kozlowski and former CFO Mark Swartz have been convicted of looting their corporate cow of more than $150 million. Both men are awaiting sentencing tentatively scheduled for August 2nd.

To remain free until sentencing, each paid $10 million bail. Kozlowski and Swartz were convicted last week on 22 counts of conspiracy, falsifying business records, grand larceny, and securities fraud. After a trial lasting more than four months, the jury reached their decision in only eleven days. Their first trial ended in a mistrial in 2004. The two men plan to appeal their convictions after a review of the trial records.

Kozlowski Blames Accountants For Excesses and Oversights

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Tuesday, June 21, 2005

Institute of Management Accountants Speaks Out About Impact of Sarbanes-Oxley on U.S. Industry

Institute of Management Accountants (IMA) President and CEO Paul Sharman in a press briefing yesterday confirmed the implementation of Sarbanes-Oxley requirements are hurting U.S. global competitiveness. He indicated the need to simplify government regulations and refocus the accounting profession on the business of doing business. Sharman broke away from the IMA conference being held this week in Boston to address reporters and discuss IMA's position on the future of the accounting profession.

Institute of Management Accountants Speaks Out About Impact of Sarbanes-Oxley on U.S. Industry

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30% of Fast-Growth Private Companies Applying Sarbanes-Oxley Principles, PricewaterhouseCoopers Finds

Three in ten fast-growing private companies are looking to benefit from provisions of the Sarbanes-Oxley Act. As they and others decide which aspects of the Act are appropriate for them, they must ask themselves two fundamental questions: Will adoption of those elements make a better company? Do the benefits outweigh the costs?

CEOs from 30 percent of the nation's fastest-growing private companies say that the Sarbanes-Oxley Act has had an impact on them and their business over the past 12-24 months (17 percent), or will in the near future (13 percent).

30% of Fast-Growth Private Companies Applying Sarbanes-Oxley Principles, PricewaterhouseCoopers Finds

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Monday, June 20, 2005

Sarbanes-Oxley Could Send You to Jail

While Sarbanes-Oxley does not mention CIOs directly, their role in the organization does expose them to greater risk of prosecution than ever before.

Have you ever wondered what it would be like to spend a few years behind bars? Well, since the passage of the Sarbanes-Oxley Act in 2002, if you are a CEO, CFO or, and here's the rub, any other c-level executive (including CIO), it is much more likely you won't have to waste too much time wondering.

Sarbanes-Oxley Could Send You to Jail

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Research and Markets: Sarbanes-Oxley Compliance: Lessons for Telecoms Operators' BSS and OSS

Less than a year after initial reports have been filed, the Sarbanes-Oxley (SOX) Act appears to be prompting a sea change in corporate attitudes to IT. While achieving compliance for the first time may be a difficult and costly process, all companies implementing the requisite measures will in time benefit from better understood, better documented and integrated processes across their organisations. This paper examines the challenges the SOX Act presents for telcos' IT processes and systems, and draws lessons from their experience to date in adapting to comply with the new regulations.

Research and Markets: Sarbanes-Oxley Compliance: Lessons for Telecoms Operators' BSS and OSS

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Sunday, June 19, 2005

Sarbanes-Oxley hits auditor relations

The soaring cost of complying with US regulation is poisoning relationships between companies and their auditors, according to the latest study on the impact of Sarbanes-Oxley legislation.

Research based on public filings and polling confirmed fears that the cost of maintaining a public listing continues to mushroom up 45 per cent on last year for large companies due mainly to rising audit fees.

Sarbanes-Oxley hits auditor relations

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Saturday, June 18, 2005

Key Technologies Cut SOX Compliance Costs by 25 Percent

Technology spending for Sarbanes-Oxley (SOX) compliance is expected to reach $1.713 billion, according to recent reports by AMR Research. This marks a 52 percent increase from the $1.13 billion in 2004, and a 1,000-plus percent increase from the $100 million spent in 2003. Moreover, nine out of ten companies surveyed by AMR expect to spend an equal, or higher, amount of money on SOX initiatives this year compared to 2004.

Key Technologies Cut SOX Compliance Costs by 25 Percent

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US SEC enforcement chief Thomsen vows no let-up

No ratcheting back of enforcement should be expected at the U.S. Securities and Exchange Commission, despite business pleas for relief, said SEC enforcement chief Linda Thomsen on Friday.

After two-and-a-half years of record-setting enforcement activity amid a wave of corporate and Wall Street scandals, Thomsen said in a speech: "We're not going to leave you alone ... We cannot declare victory and go home."

US SEC enforcement chief Thomsen vows no let-up

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KPMG Welcomes Endorsement of UK Governance Approach

KPMG has welcomed draft recommendations from the Turnbull Review Group, chaired by Douglas Flint, that the UK should not adopt US-style disclosure requirements as a model for listed companies to follow.The firm said that not only are there concerns about the level of verification and associated costs surrounding public statements on the effectiveness of internal control systems, but such a compliance based approach could undermine the focus on risk management and the risk-based philosophy of the current guidance.

KPMG WELCOMES ENDORSEMENT OF UK GOVERNANCE APPROACH

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CONVICTED: Tyco's Kozlowski guilty of fraud

Dennis Kozlowski, the former chairman and chief executive of Tyco International, and his top lieutenant were convicted Friday on fraud, conspiracy and grand larceny charges, bringing an end to a three-year-long case that came to symbolize an era of corporate greed and scandal.

Tyco's Kozlowski guilty of fraud Aide convicted also; jury in second trial finds they plotted to steal millions

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Friday, June 17, 2005

Sarbanes-Oxley Requirements Boost Value of CMA Certification

Top management accountants and finance professionals pulled ahead of public accountants in both average salary and total compensation in 2004 as the new auditing requirements of the Sarbanes-Oxley Act took effect.

Public accounting, which held the top spot in 2003, fell to 6th place last year with management accountants and finance professionals rising to first and second place, according to the findings of the 16th annual salary survey conducted by the Institute of Management Accountants (IMA).

Sarbanes-Oxley Requirements Boost Value of CMA Certification

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Not-Giants Seek Relief From Cost of New Audit Rules

Bluefly, the online discount retailer based in New York that has about 75 employees and $43.8 million in annual sales, has yearly auditing costs of about $150,000.

But when a provision of the Sarbanes-Oxley Act of 2002 requiring documentation and auditing of internal controls, known as Section 404, becomes effective for smaller companies in 2006, Bluefly's chief financial officer, Patrick Barry, expects the company's audit costs to triple or even quadruple. That could put a major financial burden on the company, which has not yet made a profit despite a sales increase of more than 35 percent in May.

Not-Giants Seek Relief From Cost of New Audit Rules

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Thursday, June 16, 2005

SEC STAFF REPORT ON OFF-BALANCE SHEET ARRANGEMENTS, SPECIAL PURPOSE ENTITIES AND RELATED ISSUES

The Securities and Exchange Commission announced today the release of a staff report prepared by the Office of the Chief Accountant, the Office of Economic Analysis and the Division of Corporation Finance on off-balance sheet arrangements, special purpose entities and related issues. The report was prepared pursuant to Section 401(c) of the Sarbanes-Oxley Act of 2002. As required by that Act, the report has been submitted to the President, the Committee on Banking, Housing and Urban Affairs of the Senate, and the Committee on Financial Services of the House of Representatives. The staff report includes an analysis of the filings of issuers as well as an analysis of pertinent U.S. generally accepted accounting principles and Commission disclosure rules. The report describes the staff's study, details its findings, and provides recommendations.

SEC STAFF REPORT ON OFF-BALANCE SHEET ARRANGEMENTS, SPECIAL PURPOSE ENTITIES AND RELATED ISSUES

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Report Card Says Auditing Still Needs Improvement

The state of American accounting is better than it was before the Enron scandal, the Securities and Exchange Commission said yesterday in a report to Congress and President Bush. But, according to the report, accounting still needs much improvement.

The staff of the commission recommended that steps be taken to change accounting for leases, pensions and derivatives to make it easier for investors to determine the accurate state of balance sheets of American companies.

Report Card Says Auditing Still Needs Improvement

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Monday, June 13, 2005

Sarbanes-Oxley and the Ebbers Conviction

The recent conviction of Bernard Ebbers, the former chairman of WorldCom, has once again raised the question of whether the Sarbanes-Oxley Act was necessary or cost-effective.

Supporters of the act have argued that Ebbers’s wrongdoing demonstrates the need for a law that mandates strict oversight of corporate managements. Opponents note that imposition of civil or criminal penalties after the fact--the way that financial fraud has traditionally been handled--would have been sufficient, and that it is not good policy to burden all businesses in order to catch a few wrongdoers.

Sarbanes-Oxley and the Ebbers Conviction

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SOX Impact on UK Companies

The SOX compliance deadline for foreign companies has been extended to July 2006 to allow additional time for UK businesses to prepare. This article discusses concerns among the 113 UK companies about the increasing cost of SOX and the possible breach of the Data Protection Act 1998 in complying with SOX.

Regularity compliance has always been an important part of the cost of running a business. Most market sectors, from healthcare and financial services to industrial manufacturing, are all subject to compliance and regulation by legislation and statute laws that impose demands on how they should conduct business and clearly state the penalties for non-compliance.

SOX Impact on UK Companies (registration required)

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Thursday, June 09, 2005

Relief from Sarbanes-Oxley on the way?

For Tom Arnold and the information technology department at StorageTek, complying with the Sarbanes-Oxley Act has been expensive, confusing and never ending.

The absence of clear guidance from government officials or auditing firms about the antifraud law has meant that IT personnel have felt compelled at times to go to extremes, said Arnold, who as corporate controller supervised the data storage company's efforts to abide by one of the law's key provisions, which took effect last year.

Relief from Sarbanes-Oxley on the way?

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IBM edges toward 'Sox in a box'

IBM edges toward 'Sox in a box' by ZDNet's Chris Jablonski -- If you're evaluating compliance tools, you may want to consider what AMR Research has to say about IBM's updated Workplace for Business Controls and Reporting in a recent report. "With its latest release, v2.5.1, arriving soon, IBM has delivered on several promises of added functionality, and with it has broadened its scope beyond Sarbanes-Oxley Act [...]

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Wednesday, June 08, 2005

Training Conference - Sustaining Sarbanes-Oxley Compliance Conference; Improve Corporate Accountability and Reduce Sarbanes-Oxley Compliance Costs

One of the most noteworthy transformations in laws regarding accounting procedure practices in the United States will be the highlight of the Sustaining Sarbanes-Oxley Compliance-West coast Conference when it gears off from September 12-13, 2005.

Sustaining Sarbanes-Oxley Compliance Conference; Improve Corporate Accountability and Reduce Sarbanes-Oxley Compliance Costs

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ASK THE EXPERTS: CFO'S BALANCING ACT

The Sarbanes-Oxley Act of 2002 is getting mixed reviews on Wall Street and in boardrooms. Advocates argue that the rules help eliminate fraud by making corporate leadership accountable. Critics counter that they place an undue burden on smaller companies and dissuade privately held businesses from going public. Two chief financial officers and one accounting professor took a break from the books to respond to questions posed by Small Times' Candace Stuart.

ASK THE EXPERTS: CFO'S BALANCING ACT

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U.S. justice system no match for white-collar crime

The reversal of the Arthur Andersen criminal conviction by the Supreme Court must seem to the firm's ultimate victims like a repeat of the 1960s, when bleeding-heart judges let off bad guys on technicalities.

Shareholders and investors, including those who lost money in the Andersen-audited Baptist Foundation of Arizona, were hit hardest by the wave of number-fudging executives and accounting firms that looked the other way. Andersen turned itself from a model of probity to one more player determined to validate the leftist critique that capitalism is, at best, borderline criminality. The firm destroyed itself with the trouble at Waste Management, Qwest, Global Crossing and finally Enron.

U.S. justice system no match for white-collar crime

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Tuesday, June 07, 2005

The COBIT/Sarbanes-Oxley Solution Conference: Information Technology's Role in Mitigating SOX Risk

Focus-On-Business.com, a business management consultancy, will present a two-day conference for senior management (CIOs and CFOs), directors of internal audit, auditors, IT managers, consultants and others tasked with achieving regulatory compliance with multiple information security requirements including the Sarbanes-Oxley Act of 2002 (SOX). The conference goal is to help attendees utilize the knowledge of lessons learned, new technologies for compliance and the Control Objectives for Information and related Technology framework (COBIT(R)) to minimize the risk of inaccurate and fraudulent reporting of financial data due to failures within the Information Technology (IT) function.

The COBIT/Sarbanes-Oxley Solution Conference: Information Technology's Role in Mitigating SOX Risk

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Jurors can't reach HealthSouth verdict

Deadlocked jurors in the corporate fraud trial of HealthSouth Corp. founder and fired CEO Richard Scrushy deliberated an 11th day Monday without reaching a verdict.

With the extended talks bumping into other commitments, including vacation plans, a court official said the jury was scheduled to deliberate only one more day this week despite the judge urging them to make a unanimous decision and avoid a mistrial.

Jurors can't reach HealthSouth verdict

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Monday, June 06, 2005

Ex-SEC commissioner: Ease up on Sarbanes-Oxley

Former SEC commissioner Harvey Pitt told a group of life science investors and executives in San Francisco on Monday that new regulatory requirements instituted in the wake of Wall Street scandals in recent years should be eased for small and mid-sized companies.

Pitt, now CEO of Kalorama Partners, a regulatory and corporate governance consulting firm, called the Sarbanes-Oxley Act of 2002 "hastily and badly drafted" and criticized it for imposing the same requirements on companies of different sizes.

Ex-SEC commissioner: Ease up on Sarbanes-Oxley

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The Institute for Financial Excellence Moderates Sarbanes-Oxley Panel at SUPERCOMM 2005

The Institute for FinancialExcellence, the organization of choice for Finance Executives, will moderate apanel entitled "Managing Sarbanes-Oxley Compliance," on Thursday, June 9th at9:30 AM at SUPERCOMM 2005 during a three-day TIA public policy program called'Convergence: Roadmap to Growth.'

The goal of this panel is to increase the attendees' understanding of ITcompliance requirements of the Sarbanes-Oxley Act of 2002; to explore bestpractices for efficiently managing compliance; and to emphasize mechanisms toreduce operational losses and reduce fraud risk.

The Institute for Financial Excellence Moderates Sarbanes-Oxley Panel at SUPERCOMM 2005

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Sunday, June 05, 2005

Jobs: Accountants are kings among grads

While it is not quite the days of the dot-com boom, when companies lured graduates with promises of six-figure salaries and ping-pong tables in the workplace, corporate recruiters are once again combing campuses for the best of the Class of 2005.

"People ask me all the time 'So you graduated, are you looking for a job?' And I'm like: 'I already have one,"' said Pauline Livaditis, a 22-year-old accounting graduate who was hired by Ernst & Young before she finished school in May.

Jobs: Accountants are kings among grads

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Thursday, June 02, 2005

Bush Set to Choose Rep. Cox to Head SEC

Moving quickly to fill a high-profile regulatory vacancy, President Bush intends to nominate Rep. Christopher Cox to chair the Securities and Exchange Commission, according to Republican officials.

Cox, R-Calif., a conservative veteran of 16 years in Congress with wide-ranging policy interests, would succeed William Donaldson, who announced Wednesday he was stepping down on June 30 after a two-year tenure marked by efforts to restore investor confidence in markets shaken by corporate excess.

Bush Set to Choose Rep. Cox to Head SEC

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Wednesday, June 01, 2005

US's Snow urges balance in Sarbanes-Oxley rules

U.S. Treasury Secretary John Snow on Wednesday warned against using Sarbanes-Oxley financial reporting rules in ways that might dampen economic growth, and he sympathized with the plight of corporate executives who are under regulatory scrutiny.

"We need to maintain balance in our enforcement," Snow said in prepared remarks to the New York University Center for Law and Business.

US's Snow urges balance in Sarbanes-Oxley rules

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