Wednesday, August 31, 2005

Zmetro.com: Congress and KPMG

That KPMG avoided indictment as a firm shows that the Justice Department has learned something from its 2002 indictment of Arthur Andersen over its involvement with Enron. That conviction was thrown out earlier this year by the Supreme Court, but its vindication came too late for its 28,000 mostly innocent employees. Not to mention for the broader U.S. economy, which was reduced to only four major accounting firms just when Sarbanes-Oxley was gaining momentum.

KPMG will survive this "deferred prosecution" by admitting wrongdoing. But it's easy to forget amid the righteous indignation over tax shelters with names like FLIP, BLIP, OPIS and SC2 that the legality of these tax-avoidance techniques has never really been tested. The IRS banned each of them in the late 1990s or early 2000s, but no court has ruled on their propriety.

Zmetro.com: Congress and KPMG

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The Spitzer Effect

"This issue is very much like Sarbanes-Oxley," says Greg Wynne, director of product and industry marketing for Callidus, a San Jose, Calif.-based incentive management system provider.

A lot of companies want to have stronger incentive compensation systems in place, but they often put the decision off until next year, he says. "But then the SOX auditors came in and said, 'Gee, you're running $2 billion worth of commissions through spreadsheets. How are we supposed to audit that?'"

Indeed, because of Sarbanes-Oxley, companies were already examining their "information supply chains" to identify any exposure to errors, inaccuracies or chicanery and build the necessary controls to eliminate those gaps, according to sources.

The Spitzer Effect

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Mercury and Deloitte Consulting Expand Strategic Alliance

Today, Mercury Interactive Corporation (Nasdaq: MERQE), the global leader in business technology optimization (BTO) software, and Deloitte Consulting LLP ("Deloitte Consulting"), one of the nation's leading management consulting firms, announced an alliance to cooperatively deliver sustainable compliance offerings to help address compliance mandates such as Sarbanes-Oxley.

As part of the agreement with Mercury, Deloitte Consulting will utilize Mercury IT Governance Center(TM) and Mercury's IT service management accelerators to compliment its approach to help companies establish a sustainable Sarbanes-Oxley compliance infrastructure. To support this effort, Mercury and Deloitte Consulting have jointly established a program for training Deloitte Consulting professionals side-by-side with Mercury consultants on Mercury IT Governance Center delivery. In addition, Deloitte Consulting's Application Management Services will continue to utilize Mercury IT Governance Center to manage the IT processes associated with their application management.

Mercury and Deloitte Consulting Expand Strategic Alliance

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Compliance becomes best practice

According to McAdam, the midsized market is seeing the value in data retention policies historically tied to regulation by government agencies or laws, including the Securities and Exchange Commission, Health Insurance Portability and Accountability Act and the Sarbanes-Oxley Act (SOX).

"We're seeing sort of compliance with a small c, where it's not tied to regulations," McAdam said. "More and more, contracts and other important negotiations are being done over e-mail or instant message. These businesses are starting to realize they had better save those electronic documents the way they already do physical documents."

Companies like EMC Corp., IBM and Hewlett-Packard Co. (HP) are adjusting compliance and data retention products for the midrange as well with smaller versions of products, such as EMC's "baby" Centera, HP's RISS system and IBM's DR550, McAdam said.

Compliance becomes best practice

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Tuesday, August 30, 2005

Tools Offer Regulatory Road Map

Like most enterprise IT products and services I see these days, ITIL is fueled by organizations' need to comply with regulations such as the Sarbanes-Oxley Act, COBIT (Control Objectives for Information and related Technology), HIPAA (Health Insurance Portability and Accountability Act) and the Gramm-Leach-Bliley Act.

Tools Offer Regulatory Road Map

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Sarbanes-Oxley hitting recruitment of directors

Two-thirds of senior financial executives in U.S. public companies believe that the Sarbanes-Oxley corporate-disclosure law and concerns about higher director liability has made it more difficult to find qualified directors to serve on boards. But while public companies have been having problems recruiting directors, more than three quarters of privately-held companies have not experienced the same difficulties.

This huge discrepancy highlights the fact that most privately held companies do not face the regulatory oversight that their publicly held counterparts do, or the threat of class-action shareholder lawsuits.

Sarbanes-Oxley hitting recruitment of directors

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Monday, August 29, 2005

Business Controls Caddy: Sarbanes-Oxley Impacts Hit Home

People often tell me that they never have to worry about Sarbanes-Oxley directly impacting them. I often liked to think the same thing. Well, today I got hit. For those of you that do not know, I do freelance production work for CBS Sports, ESPN and Jefferson-Pilot Sports. Today, I got this letter from Jimmy Rayburn, the Executive Producer of JP Sports...

Business Controls Caddy: Sarbanes-Oxley Impacts Hit Home

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New York Times: KPMG, a Proud Old Lion, Brought to Heel

And while it was not unique among auditing firms in selling aggressive tax shelters, KPMG did it the longest and showed the least regard for efforts by the Internal Revenue Service to find out what was happening and to force shelter promoters to disclose what they were doing.

Of all the major accounting firms, it was the one with the strongest sense that it alone should determine both the quality of its work and the rules it should follow. Proud and confident, it brooked no criticism from regulators.

New York Times: KPMG, a Proud Old Lion, Brought to Heel

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Kodak Names Patrick M. Sheller Chief Compliance Officer

As Chief Compliance Officer, Sheller will be responsible for ensuring that Kodak’s compliance programs and policies continue to meet the highest legal, regulatory and ethical standards; monitoring adherence to these programs and policies; working with regulatory agencies on compliance matters; and implementing compliance awareness programs and training.

In his capacity as Chief Compliance Officer, Sheller, 44, will report to both Laurence L. Hickey, Corporate Secretary and Chief Governance Officer, and to the Audit Committee of the company’s Board of Directors. He will also be a member of the company’s Ethics Committee.

“Given the enhanced regulatory environment and the complexity of our global operations, this is an important role that will help us ensure Kodak continues to meet the highest standards of business practices,” said Joyce P. Haag, Kodak General Counsel and Senior Vice President. “Pat’s experience in the regulatory arena, combined with his deep knowledge of Kodak’s operations, makes him uniquely suited to lead our global compliance efforts.”

Kodak Names Patrick M. Sheller Chief Compliance Officer

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Work Remains for Sarbox Compliance

Businesses have a lot of work ahead of them before they're fully compliant with federal data retention and financial reporting rules under the Sarbanes-Oxley Act, a new study concludes. The survey, co-funded by PricewaterhouseCoopers and compliance software vendor Virsa, said businesses that hit their marks during the first year of reporting under the new law. But the survey, published today, also found that many are struggling to implement automated business controls for staying in compliance.

Work Remains for Sarbox Compliance

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Sunday, August 28, 2005

May it Please the Court: 'Material Weakness' In Sarbanes-Oxley May Result In Changes

The words Sarbanes-Oxley can strike fear in the hearts of most CEOs, especially small- to medium-sized businesses who end up paying a small fortune for compliance, forcing many to go dark and delist themselves from various stock exchanges. If your company is considering such a change, you may want to wait and see what happens in the near future with possible upcoming changes to the law.

May it Please the Court: 'Material Weakness' In Sarbanes-Oxley May Result In Changes

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Top firms pick smaller accounting firms

Grant Thornton, the fifth-largest accounting firm, followed by BDO Seidman, McGladrey & Pullen, and the Crowe Group are gaining more business from the largest firms, because some businesses like the added attention they get. Others are seeking a smaller invoice because the time charged for audits has gotten larger.

The Sarbanes-Oxley Act, passed following several accounting scandals in the early 2000s, has increased the number of hours required for a typical audit by more than 30 percent, the New York Times reported.

Top firms pick smaller accounting firms

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Saturday, August 27, 2005

IT Controls and old SOX

To the IT practioner, SOX is all about controls. It's all very well having correct Processes, correct System Development Life Cycles, correct Authorisation processes and correct documentation, but if they don't have a process for QA and review then the're not worth anything in a control sense. First we're going to have to take a look at what the US Securities and Exchange Commission (SEC) said in its final rules about the Sarbanes Oxley Act. The SEC more or less mandated the use of the Committee of the Sponsoring Organization of the Treadway Commission (COSO) internal control framework.

Section 404 of the SOX act addresses internal control over financial reporting, but I take the position that if you're going to automate any form of control over your IT Systems, then you may as well do it for all your Business functions. It would be nice to give your customers the same confidence that you're going to give your Auditors.

IT Controls and old SOX

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65% of Sr. Financial Officers of Public Companies Say It's Harder Today to Recruit Directors, Citing Sarbanes-Oxley Act, Increased Director Liability

Finding qualified directors to serve on boards has proven more difficult in recent years as shareholder lawsuits have raised concerns about director liability.

"Sarbanes-Oxley was a needed watershed event in corporate governance, but along with the greater protection of investors, there are increased time requirements for directors," says Ed Nusbaum, Grant Thornton LLP chief executive officer. "But an even greater obstacle is the fear of litigation."

While most senior financial executives of publicly held companies believe it's more difficult today to recruit directors, 78 percent of those from privately held companies haven't found it to be a problem. That's not so surprising since most privately held companies don't face the regulatory oversight that their publicly held counterparts do from Sarbanes-Oxley and other regulations or the threat of class-action shareholder lawsuits.

65% of Sr. Financial Officers of Public Companies Say It's Harder Today to Recruit Directors, Citing Sarbanes-Oxley Act, Increased Director Liability

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Sean McCormack: Black Box vs White Box Testing

In a disciplined testing environment, you need both white (sometimes called glass) and black box testing. If you're in an environment that's mandated by SOX (Sarbanes Oxley) then it's required. I can't tell you how many times black box testing has driven out issues that white box testers never even caught.

Sean McCormack: Black Box vs White Box Testing

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Balance Sheet: Plot twist hits reality

The Big Four firms are already operating flat out, to the point of staff abuse, under the burden of work required by Section 404 of the Sarbanes-Oxley Law, and they are hiring workers as best they can to replace those they chew up. It is not a recipe for success to think that they could ramp up further, to perform a new, high-value service with workers hired from the next lower level of education and professional competence.

If the current audit firms took on a new role, what additional work would they do?

Balance Sheet: Plot twist hits reality

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Friday, August 26, 2005

SOX Compliance's Broader Benefits

New research reveals that executives are catching on to the ways in which technology and processes first put in place to meet Sarbanes-Oxley (SOX) regulations can be made to yield value across the enterprise. This article from March, 2005, details some ways in which this value can be created.

There are a couple of ways of keeping compliance spending in perspective. For example, it helps to remember why legislation such as Sarbanes-Oxley (SOX) has come about. But business is about the bottom line, and many public enterprises seem to feel as if SOX is making them carry the financial bag for the misdeeds of others.

SOX Compliance's Broader Benefits

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Thursday, August 25, 2005

Colorado Musings: You don't get strong boards through strong regulation

I continue to be bewildered by the argument from academia and by many in government that simply increasing the regulations surrounding corporate governance, and in particular board structure/composition, will result in a more accountable enterprise and improved corporate responsibility.

I have yet to see any definitive evidence that there is a positive correlation between stringent governance regulations, such as the Sarbanes-Oxley Act, and better governance. Nonetheless, that doesn’t seem to stop a number of regulation-lovers from seeking to impose more and more rules on the private sector.

Colorado Musings: You don't get strong boards through strong regulation

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Spotlight turns to chief compliance officers

Eastman Kodak Co. this week named Patrick Sheller as its first chief compliance officer, joining a growing pack of companies that want a single person representing their slew of new compliance practices and policies. For the Rochester, N.Y.-based Kodak, the hiring of Sheller appears timely. His appointment comes two weeks after Kodak revealed that the Securities and Exchange Commission is conducting an "informal" probe into the company's restatement of earnings from 2003 and 2004. In April, Kodak said accounting mistakes had led the company to overstate its 2004 profits by $93 million, and its 2003 profits by $12 million. And other bottom-line issues are looming. The troubled photography company, scrambling to keep up with the digital revolution, is also undergoing a massive restructuring that will eliminate as many as 25,000 by mid-2007.

Spotlight turns to chief compliance officers

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Wednesday, August 24, 2005

Developing secure software is a management issue

With the increased scrutiny of internal processes and controls resulting from mandates such as the Sarbanes-Oxley Act, executives are demanding that IT improve the development process in order to create more secure and reliable software.

When security vulnerabilities in a vendor's software are exploited, significant costs are faced by the vendor and its software users. Software with security vulnerabilities harms an organization's reputation with customers, partners and investors. It increases costs as companies are forced to repair unreliable applications, and it delays other development efforts as limited resources are assigned to address current software deficiencies.

Developing secure software is a management issue

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No Poaching from KPMG, Say Audit Firms

KPMG faces a penalty of up to $500 million as it attempts to negotiate a settlement with the Department of Justice over its marketing of questionable tax shelters — an agreement, sources say, that could come as early as this week. Reportedly, the hands-off policy is intended to help KPMG avoid the fate of Arthur Andersen, which was accused by federal prosecutors of obstructing an investigation into audit client Enron Corp. The firm's conviction reduced the number of large accounting firms to four, leaving its rivals to pick up many of Andersen's auditing clients and partners. A similiar fate for KPMG might incline regulators to intervene for the sake of competition and possibly break up the remaining firms, sources suggested to Bloomberg.

No Poaching from KPMG, Say Audit Firms

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More Good News Than Bad for KPMG

KPMG has had their fair share of bad news since becoming the focus of federal prosecutors but there is unofficial word that an agreement will be announced later this week. Better yet, their Big Four competitors have each told their partners should refrain from "poaching" KPMG's clients.

The settlement calls for the smallest of the Big Four accounting firms to pay a fine totaling between $300 and $500 million and accept independent oversight of its operations in order to avoid prosecution.

In the deferred prosecution, there will also be a yet unstated probationary period. If the firm stays out of trouble during that set time, the charges will be dropped by the U.S. Attorney for the Southern District of New York. The firm has about 1,600 partners and currently audits the financial statements of more than 1,000 companies.

More Good News Than Bad for KPMG

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Tuesday, August 23, 2005

Presumed Guilty: The Injustice and Destruction of Sarbanes-Oxley - The Ayn Rand Institute

Imagine opening tomorrow's newspaper and reading this: "Citing all-too-frequent child abuse and neglect, Congress has proposed the Parenting Reform Act. Under the proposed law, all parents must sign a sworn statement pledging that they have not 'caused unreasonable physical harm or danger' to their children. To verify their compliance, all parents will be required to submit their children to a monthly full-body inspection by the new Parental Oversight Board, and account for every cut, scrape, and bruise that inspectors find. If a parent cannot prove the 'reasonableness' of any injuries to the Board’s satisfaction, it could result in a loss of custody and 20 years in prison.

"'If a child has a bruised leg,' one of the bill’s supporters said, 'we need to know about it--and we need to know how it happened. If it happened playing soccer, we need signed accounts from the coach and the referee. Otherwise, how can we be sure his father didn’t just get drunk and beat him? And if a child gets a lot of bruises playing soccer, we need an explanation of why his parents continue to expose him to such danger.'"

Presumed Guilty: The Injustice and Destruction of Sarbanes-Oxley - The Ayn Rand Institute

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Sarbanes-Oxley seen as biggest IT time waster

One of the survey's questions asked respondents to imagine themselves being transported to 2015 and then looking back at 2005 and what they thought in retrospect would prove to be either an ineffective or wasteful use of their IT time. Twenty-eight percent of those polled cited Sarbanes-Oxley compliance, followed by deployment of unproven technologies (23 percent), purchase of unneeded technologies (19 percent), and continuing support for outdated technologies (17 percent). The fifth-rated bugbear cited by 10 percent of respondents was external consultants, with software upgrades only distressing one percent of those polled.

Robert Rosen, the current president of Share, wasn't surprised that Sarbanes-Oxley is proving to be a major headache. "It's occupying a lot of people's time and they can't figure out what the return on investment is there," he said.

Sarbanes-Oxley seen as biggest IT time waster

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Monday, August 22, 2005

11 places better to invest than the U.S.

I will concede, however, that a number of economic trends in the United States are troubling and are already damping down our economic fire. Public-sector growth is accelerating as Republicans spend more freely than Democrats ever did. Our attitude toward foreign investors is racist. (Think China/Unocal recently and the Japanese in the 1980s.) Regulators are running amok with costly rules like Sarbanes-Oxley that proscribe activities that were already illegal. And I certainly think now is a good time to be invested overseas. In my model portfolio of ETFs, I have 15% of assets in foreign equities. Earlier in the year, I had as much as 25% overseas and may have been too quick to trim that exposure.

11 places better to invest than the U.S.

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Ethics means more than ticking boxes

Corporate governance codes have proliferated and business ethics is a fast-growing industry. But has corporate behaviour changed? The scandals just keep coming: Citigroup, AIG, Volkswagen and SK Corp have all had to defend themselves against allegations of ethical misconduct in recent months. Meanwhile, boardroom pay and golden goodbyes continue to escalate far beyond any corresponding improvement in corporate performance. The actors may have learnt their cues better, but they appear to have lost the plot. Why is this? And what can and should be done about the serious ethical shortcomings in finance and business?

Ethics means more than ticking boxes

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Sunday, August 21, 2005

Basel II Compliance: Another Burden for European CSOs?

The Basel II capital adequacy framework is a regulatory tool that is designed to help mitigate the risk that haunts financial institutions. Its designers had a clear purpose in mind: to create safer and sounder financial institutions by mandating that the amount of capital that they hold offsets the risks inherent in the banking system.

Risks to financial institutions are traditionally classified as three-fold: credit risk, market risk, and operational risk. In development since 1999 and building on the Basel I directive on capital adequacy as well as bank supervision legislation, the rules for the Basel II directive were finally agreed in July 2004. Back in 1998, when Basel I was ratified, banks were wrestling with bloated loan portfolios and credit risk loomed as banking's big bugbear. But the world of finance has become increasingly complex, exposing banks to greater risks than ever before. To overcome this, the Basel II framework aims to enhance the transparency of financial institutions' operations and to support a level playing field in an increasingly integrated global financial system.

Basel II Compliance: Another Burden for European CSOs?

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Saturday, August 20, 2005

A SOX Partnership

The Sarbanes-Oxley (SOX) regulations cut horizontally across your enterprise's content. You know by now that e-mail, to take just one example, has to be stored and retrievable for years, and you may be addressing this need through an enterprise content management (ECM) solution. Still, there are other ways to get at the problem, e.g. through enterprise applications or via the assistance of specialist vendors like Open Pages.

A SOX Partnership

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Thursday, August 18, 2005

Dump This Destructive Deadweight

The conviction of and subsequent 25-year sentence given to Bernie Ebbers make an excellent case for repealing or substantially modifying the Sarbanes-Oxley Act, a destructive piece of legislation rushed through Congress three years ago in the aftermath of the WorldCom collapse. This ill-thought-out, hastily written law has cost shareholders and the U.S. economy infinitely more money than Bernie Ebbers and his ilk ever did.

The stock market quickly recovered after the WorldCom collapse. Stocks plummeted only when it became clear that Washington was going to pass the Sarbanes-Oxley Act. In a matter of days equity values shrank by several hundred billion dollars. It was only after the passage of the Bush tax cuts in the spring of 2003 that equities--and the economy--firmly recovered.

Dump This Destructive Deadweight

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Wednesday, August 17, 2005

Threatchaos.com: Connecting the dots with SOX

"That's it?" may be your first reaction upon reading this section. But, by delving further into the world of audit, risk assessment, and controls you can begin to understand why this simple language has such far-reaching implications. Keep in mind that ensuring that every part of Sarbanes-Oxley is implemented is the personal responsibility of the CEO and CFO.

Threatchaos.com: Connecting the dots with SOX

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Scottish Power shifts to single billing system

Scottish Power is hoping to cut costs and improve business processes by moving its UK commercial and industrial customers to a single billing system. By replacing six legacy applications with one billing system from Hansen Technologies, the utility firm will also ensure it meets regulatory requirements.

'We find that with Sarbanes-Oxley the need for improved adaptability is quite onerous, but a lot of the controls and reporting functionality comes as standard with the Informatica product,' said Johnston.

Scottish Power shifts to single billing system

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EOA Completes Survey on Ethics Officer Compensation

The Ethics Officer Association (EOA) is a non-consulting, member-driven association exclusively for individuals who are responsible for their company’s ethics, compliance, and business conduct programs. The only organization of its kind, it is the largest group of corporate ethics and compliance practitioners in the world. The EOA is a non-profit, 501(c)(6) association, which derives all of its revenue from members’ dues, conferences and other meeting fees, and financial contributions.

The EOA brings together people who are new to the field, as well as those with years of experience to share. Through the EOA, practicing ethics and compliance officers address the tough issues they face every day. Members learn from one another and, in turn, help to foster a global commitment to ethics and integrity.

Did You Know that the recently completed EOA/Salary.com compensation survey shows total compensation for Top Global Ethics and Compliance Executives approaching $750K?

EOA Completes Survey on Ethics Officer Compensation

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Salary.com and Ethics Officer Association Survey Validates Value of Ethics and Compliance Officers' Roles in Today's Corporate World

Salary.com and the Ethics Officer Association (EOA) today announced the results from a recent survey conducted to gauge the compensation earned by individuals holding "Ethics & Compliance Officer" jobs in corporate America. Titled "2005 EOA Survey of Ethics & Compliance Officer Jobs," the results of the survey show the increase in value that ethics and compliance officer jobs have in today’s highly scrutinized business world, which is still recovering from dozens of high profile corporate scandals in the past five years. Results show total compensation for Top Global Ethics and Compliance Executives approaching $750,000.

"If the Federal Sentencing Guidelines issued in November 1991 created the ethics profession, Sarbanes-Oxley created an entire industry," said Keith Darcy, the Executive Director of the EOA. "The new standards of doing business, introduced by legislators, regulators and prosecutors over the past several years have made the skills and experiences necessary to manage these risks by ethics and compliance officers much more important. The survey by Salary.com comprehensively addresses the compensation migration in the ethics and compliance community."

Salary.com and Ethics Officer Association Survey Validates Value of Ethics and Compliance Officers' Roles in Today's Corporate World

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Saturday, August 13, 2005

The Hidden Costs of Sarbanes-Oxley: Employee Morale

Consultants. Rising audit fees. Dozens of new internal auditors. Executive meetings. Revenue-generating projects put on hold. The tangible costs of Sarbanes-Oxley (SOX) compliance hit almost every public company in the United States and will soon reach many more around the globe.

While executives seek to drive down these substantial compliance costs, another expense of SOX compliance continues to rise: employee morale and job dissatisfaction.

Nearly half of financial executives feel the biggest issue related to SOX compliance is the need to maintain the morale of the employees responsible for compliance, according to the 2005 Oversight Systems Financial Executive Report on Sarbanes-Oxley. (Reducing internal and external costs ranks as the second most frequently cited challenge to ongoing compliance.)

The Hidden Costs of Sarbanes-Oxley: Employee Morale

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Wal-Mart Denies It Defamed Bowen

Bowen's attorney, Steve Kardell of Dallas, filed a complaint on his client's behalf in May with the U.S. Department of Labor, alleging Wal-Mart violated a provision of the Sarbanes-Oxley Act that prohibits retaliation by a company against whistleblowers.

Wal-Mart responded publicly by denying Bowen was a whistleblower and accused him of being involved in Coughlin's alleged deception. It released copies of Bowen's college transcripts, which the company said shows Bowen lied to Wal-Mart about his education, and posted copies of it at walmartfacts.com.

Wal-Mart Denies It Defamed Bowen

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National Center for Policy Analysis: Sarbanes-Oxley: Seriously Misconceived

Given the state of the economy and relatively robust corporate profits, one would expect the stock market to be higher. One factor may be the Sarbanes-Oxley legislation, enacted in 2002 as a knee-jerk reaction to the corporate scandals of Enron, WorldCom and others, says Bruce Bartlett, a senior fellow with the National Center for Policy Analysis.

National Center for Policy Analysis: Sarbanes-Oxley: Seriously Misconceived

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Bruce Bartlett on Sarbanes-Oxley and the Stock Market on NRO Financial

The latest jobs report shows that the real economy is strong and growing impressively. But there are continuing weaknesses in the financial sector that are worrisome and could drag the real economy down unless addressed.

One area of concern is the stock market. Since the beginning of last year, the Dow Jones Industrial Average has basically been flat. It moves up and down within a narrow range and has never been able to sustain an upward trend. Shockingly, the Dow is no higher today than it was six years ago and is still below its 2000 peak.

Given the state of the economy and relatively robust corporate profits, one would expect the stock market to be higher. One reason it may not be is that traders are implicitly discounting corporate profits to account for some risk factor. It would be the flip side of the argument that was often made during the 1990s stock market boom that there had been a decline in risk that justified higher price/earnings ratios than existed historically.

I believe that one factor holding back the market may be the Sarbanes-Oxley legislation, enacted in 2002 as a knee-jerk reaction to the corporate scandals of Enron, WorldCom, and others. Reports suggest that the cost of this legislation is extremely high just in terms of out-of-pocket expenses. But the intangible costs could be far, far higher.

Bruce Bartlett on Sarbanes-Oxley and the Stock Market on NRO Financial

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Wednesday, August 10, 2005

Liberty International Underwriters Now Offers Accountants’ Professional Liability In 34 States and D.C.

Liberty International Underwriters (LIU), a division of Liberty Mutual Group, and ProTexn, Inc. announce that CPAEssentialSM, an accountants’ professional liability policy designed specifically for CPAs and CPA firms, is now available in 34 states plus the District of Columbia.

“In the wake of Enron and Sarbanes-Oxley, today’s accountants are being held to the highest standards ever,” said LIU Senior Vice President, Bruce Eisler. “CPAs can do all the right things and still be hit with costly lawsuits. LIU gives accountants insurance peace of mind so they can focus on growing their practices.”

Liberty International Underwriters Now Offers Accountants’ Professional Liability In 34 States and D.C.

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Tuesday, August 09, 2005

Is Sarbanes-Oxley Holding the Market Back?

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Applying Sarbanes-Oxley to Venture Capital - A VC's whitepaper

Reporting venture capital performance to investors has always been a sensitive issue for venture capital funds, even in good times. But recent, challenging market conditions along with the passage of the Sarbanes-Oxley Act has made it an even more contentious issue. Without a doubt, the Sarbanes-Oxley Act is the single most onerous legislation impacting governance, financial disclosure and the practice of public accounting since the US securities laws of the early 1930s. The lack of a universally accepted standard for financial reporting, as well as a lack of consensus on what would constitute a set of best practices, creates a potentially dangerous financial scenario for the entire venture capital industry.

In this article, I will explore the issues surrounding portfolio performance, specifically the valuation metrics, which are used to demonstrate a fund's success or lack luster performance. We'll explore the inequity in the current methods used, their inherent conflicts and flaws, and, an approach for improving the fairness within the valuation reporting process. I believe that there is a clear necessity to implement certain Sarbanes-Oxley best practices to the process of setting these values on venture capital holdings, as well as implementing sound business processes.

Applying Sarbanes-Oxley to Venture Capital

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Countrywide Financial Faces First Sarbanes-Oxley Lawsuit Over Inadequate Controls, Says Lindsay Jenkins

Countrywide Financial faces a Sarbanes- Oxley lawsuit from a disgruntled borrower who claims that Countrywide has inadequate internal financial controls to comply with federal law. Mrs. Lindsay Jenkins filed her lawsuit in U.S. District Court for the Northern District of Illinois (Jenkins v. Mozilo). The lawsuit also lodges sex discrimination claims. The lawsuit represents one of the first cases brought pursuant to the remedial provisions of the Sarbanes-Oxley statute.

Countrywide Financial Faces First Sarbanes-Oxley Lawsuit Over Inadequate Controls, Says Lindsay Jenkins

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Sunday, August 07, 2005

Sarbanes-Oxley boosts audit costs, turnover at the top

Three years after Congress passed a strict corporate-accountability measure designed to make it harder to defraud investors about corporate financial health, companies are experiencing higher audit fees and increased turnover among financial executives. The Sarbanes-Oxley Act imposed new duties on corporate officials and subjected auditors to discipline from an independent panel. Analysts say the law has induced executives to pay more attention to financial data and prompted board members and accounting firms to take their work more seriously.

"Disclosure is more complete, more timely and more accurate, managers are more serious about their jobs, and boards are more active and questioning," Harvey Goldschmid, a departing Securities and Exchange Commission (SEC) member, said in an interview this week.

Sarbanes-Oxley boosts audit costs, turnover at the top

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Friday, August 05, 2005

Operations Risk - CIO’s Want More Stringent Sarbanes Guidelines

A new poll of chief information officers (CIOs) reveals that more than two-thirds of CIOs impacted by Sarbanes-Oxley (SOX) regulations want more specific guidelines about the SOX compliance process.

To date, CIOs estimate their organizations have spent just under 2% of gross revenue to comply with Sarbanes-Oxley and an average of $1,450,000 of their IT budget during the past twelve months. The poll, conducted by IDG 's CIO Executive Council, also shows the majority of CIOs believe SOX compliance costs will either increase (21%) or stay the same (49%) in Year 2.

Operations Risk - CIO’s Want More Stringent Sarbanes Guidelines

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Corporations Challenged to Balance Sarbanes-Oxley with Ongoing Auditing

Internal auditors at many companies have been so consumed by Sarbanes-Oxley regulations that regular priorities are falling behind.

The amount of legwork that Sarbanes demands caught many finance departments and compliance project teams by surprise. Internal auditors were pulled away from their normal duties and assigned to compliance tasks. One common problem was if internal auditors contribute to the testing of internal controls, they should not be expected to evaluate their own work. Internal auditors' compliance work often encompassed documentation and remediation as well as controls testing.

Corporations Challenged to Balance Sarbanes-Oxley with Ongoing Auditing

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A Danger Recognized, but not Avoided

Mismanagement and accounting scandals at publicly traded companies have given lawmakers around the world reasons to cultivate more transparency. Laws like the Sarbanes-Oxley Act in the United States and the German law on monitoring and transparency in companies (KonTraG in its German abbreviation), as well as international accounting standards (IAS), have been in force for several years. Just what have they accomplished?

A Danger Recognized, but not Avoided

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Thursday, August 04, 2005

BOC faces 20m Pound Sarbanes-Oxley compliance bill

Industrial gases group BOC said it faces higher than expected costs, totalling around £20m, over the next two years in order to bring the company into full compliance with the Sarbanes-Oxley (SOX) corporate governance regulations.

In the company's third-quarter results presentation to analysts, BOC chief executive Tony Isaac said he was "surprised" about the high corporate costs of compliance compared to first estimates.

The deadline for SOX compliance is September next year and BOC said it will have to spend £10m this year and another £10m in 2006 to bring its financial reporting and internal controls up to scratch.

BOC faces 20m Pound Sarbanes-Oxley compliance bill

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Tuesday, August 02, 2005

CEOs Say SOX Makes Better Boards; NYSE Survey Outlines 2006 Business Challenges

Eighty percent of the 100 CEOs surveyed for the "NYSE CEO Agenda 2006" said they spend more time on regulatory and compliance issues than five years ago. Almost 70 percent find compliance with section 404 of Sarbanes-Oxley the most demanding governance task, and while a majority of CEOs question the balance between the investment required and the resulting benefits, most CEOs agree that Sarbanes-Oxley and Exchange governance rules have contributed to board members being more informed (66 percent) and better engaged (72 percent).

CEOs Say SOX Makes Better Boards; NYSE Survey Outlines 2006 Business Challenges

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