Monday, July 31, 2006

Sarbanes-Oxley blamed for capital flight

The Sarbanes-Oxley corporate accounting law is driving companies away from the United States, a congressman is warning.

U.S. Rep. Tom Feeney, R-Fla., says the law, passed in the wake of the WorldCom and Enron scandals, has led to an 'outsourcing of America`s 100-year lead in capital formation,' the Financial Times reported Monday.

U.S. bankers, particularly, are noticing that foreign companies that would once have listed on U.S. stock exchanges are choosing London and Hong Kong, instead.

Sarbanes-Oxley blamed for capital flight

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Formtek Blog: Sarbanes-Oxley Compliance and ECM

t’s been only four years since the Sarbanes-Oxley Act (SOX) was passed. But in many ways this one piece of legislation has already had a profound impact on the entire business community. The goal of SOX is to achieve greater transparency and accountability in financial reporting, and in doing so, provide a way to more closely scrutinize public coporations from the outside. Stiff fines, penalties and the threat of litigation have been strong motivators to get companies to comply. But many or maybe even most companies still have a long way to go.

Part of the reluctance or difficulty with SOX is just coming to grips with what it all means. SOX does not clearly spell out in black and white the steps for achieving compliance. It was intended to provide overall guidance, but it is very broad and lengthy, consisting of 11 parts and 66 sections. The language in SOX was written in very general terms to spell out requirements that apply to all public companies, and the interpretation and the methods by which SOX compliance are achieved is still evolving.

Formtek Blog: Sarbanes-Oxley Compliance and ECM

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Suits, Sarbanes-Oxley linked to CEO stock sales

Chief executives are more likely to sell large chunks of their stock holdings when their companies disclose new litigation or a violation of Sarbanes-Oxley internal controls requirements, according to a study released on Monday.

The report by The Corporate Library, which examined 120 chief executives who sold more than a third of their company shares in 2005, showed 30 percent sold stock when their company was involved in some sort of litigation. Twenty-four percent of the chief executives sold stock when there was a Sarbanes-Oxley violation at their firm.

Suits, Sarbanes-Oxley linked to CEO stock sales

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Happy Birthday, Sarbanes-Oxley!

When the Sarbanes-Oxley Act came squalling into existence on July 30, 2002, it was widely viewed as an unruly baby, spawning humongous costs and heavy compliance burdens for Corporate America. Now, on its fourth birthday, the law is being viewed in some circles as an amiable child — still difficult in some respects, it's true, but certainly manageable.

John Hagerty, a vice president and analyst at AMR Research Inc. in Boston who has done a good deal of numbers-crunching on Sarbox-related compliance costs, prefers a different metaphor. The evolution in many companies' responses to Sarbox, he says, resembles the stages in the way people react to a death: first shock and anger, then acceptance, and finally a sense of moving on.

Happy Birthday, Sarbanes-Oxley!

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Utah has tech-central potential, but lacks a particular presence

Most of these firms have experienced recent rampant growth. From a personnel standpoint, they struggled to meet the day-to-day requirements of that growth even before Sarbanes-Oxley. Consequently, many of them were overwhelmed by the new requirements surrounding controls, a fact that is confirmed by the greater number of internal control weaknesses reported by these companies during the first two years of Sarbanes-Oxley. You have to remember that the overall risk profile of a high-tech firm is generally much different than that of a traditional company. When pricing their investments, sophisticated investors take into account all of the various risks involved, including the heightened risk of failed financial controls present in many high-tech firms.

Utah has tech-central potential, but lacks a particular presence

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Sunday, July 30, 2006

Four years later, Sarbanes-Oxley still an adjustment

Four years after the passage of the Sarbanes-Oxley corporate reforms, companies have begrudgingly adjusted to the law's hefty internal control requirements, but small companies are still worried about how much it will cost to comply with the law.

"It's a big summer for Sarbanes-Oxley," said David Chavern, vice president of the U.S. Chamber of Commerce. "We're all waiting to see what the regulators do ... because it will have a long-term effect on how Sarbanes-Oxley will be implemented."

Companies of all sizes have complained that the law's internal control section, which requires companies' outside auditors to say publicly whether a company's controls are adequate, is too expensive.

Four years later, Sarbanes-Oxley still an adjustment

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Sarbanes-Oxley means 'huge leak' for US capital markets

The US's Sarbanes-Oxley law on corporate accounts has led to an "outsourcing of America's 100-year lead in capital formation", according to Tom Feeney, a Republican congressman who is urging changes to the law.

As foreign companies shun US stock exchanges in favour of their counterparts in London or Hong Kong, there is growing concern among bankers about whether the new law is driving capital offshore.

Sarbanes-Oxley means 'huge leak' for US capital markets

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Friday, July 28, 2006

PCAOB issues stock options alert

U.S. audit regulators on Friday issued an alert on stock option accounting practices, reminding auditors of their obligations if they observe illegal acts in the course of performing audits.

The Public Company Accounting Oversight Board (PCAOB), overseer of U.S. public company auditors and created under 2002's Sarbanes-Oxley corporate reform law, reminded auditors to be "alert to the risk that the issuer may not have properly accounted for stock option grants."

The PCAOB notice says "the incidence of these ... practices may have substantially decreased" after the implementation of Sarbanes-Oxley, but auditors were reminded that accounting errors for stock options granted before 2002 may still cause serious errors in current financial statements.

PCAOB issues stock options alert

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Rep Oxley Cites Fannie Case In Defending Sarbanes-Oxley

U.S. House Financial Services Committee Chairman Michael Oxley, R-Ohio, cited the Fannie Mae (FNM) accounting scandal as "a recent case that clearly demonstrates the continued need for Sarbanes-Oxley compliance."

In a statement Friday marking the fourth anniversary of the Sarbanes-Oxley Act of 2002, Oxley said Fannie Mae "is still in the midst of recovering from an $11 billion accounting scandal," and added that "it was not until Fannie had to comply with Sarbanes-Oxley requirements that executives at the company finally admitted that the company's internal controls over financial reporting were ineffective."

Noting that the costs associated with the Section 404 internal control provision are the focus of most criticism of Sarbanes-Oxley, the congressman asserted that "these costs were severely overestimated, especially for smaller public companies."

He said he continues to believe that "these costs are due, not to the text of the Sarbanes-Oxley Act, but to an overly zealous implementation of these internal control provisions."

Rep Oxley Cites Fannie Case In Defending Sarbanes-Oxley

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Australian companies struggle with SOX deadline

Australian companies can expect a few mistakes. In the U.S., one in six companies failed to meet Sarbanes-Oxley (SOX) compliance in the first year.

KPMG LLP's Australian head of Sarbanes-Oxley compliance, Brian Bogardus, said it is hard to say why these companies are failing as there are too many complexities involved, adding that the Securities and Exchange Commission (SEC) disclosures do not go into tremendous detail.

Australian companies struggle with SOX deadline

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MergerTalk: Poison pills become slightly less bitter

The number of poison pills is still declining in the United States in the aftermath of the corporate governance frenzy that spurred Sarbanes-Oxley legislation in 2002.

But as activist investing, particularly by hedge funds, picks up and companies have tried to make the pills more investor friendly, the strategy seems likely to stick around in some format.

"There are a lot of hedge funds and private equity funds that are basically doing financial deals that companies may not want to take because they are looking for a strategic partner," said Carl Sanchez, chair of the global mergers and acquisitions practice at Paul, Hastings, Janofsky & Walker, based in San Diego.

MergerTalk: Poison pills become slightly less bitter

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Thursday, July 27, 2006

Compliance: Do I Need To Worry?

Call it a good news and bad news scenario: Likely, a small to midsized enterprise won’t have to worry much about compliance right now, but that doesn’t mean it can relax and let the bigger companies fret about it or that compliance won’t affect it within a few years.

Compliance, the buzzword du jour in technology and financial circles, is shorthand for adhering to regulations such as Sarbanes-Oxley (also called Sarbox) and HIPAA, which have been put into place to ensure that publicly traded companies are employing adequate financial and administrative controls.

Most SMEs are exempt from following the regulations because most aren’t public and don’t deal with healthcare or financial issues, but they should be aware of how customers and vendors are affected by the laws. Also, Sarbox in particular is being rolled out in a number of stages and could include mandates for SMEs in the future. Having some savvy now about what’s required--even if the company doesn’t need to implement changes--could protect a business in the long run.

Compliance: Do I Need To Worry?

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Pratical Assurance: Sarbanes Oxley now Controls the World

A note to those just getting started with Sarbanes-Oxley. It’s not really that bad. Yes, there is more paperwork. Yes, executives must sign on the dotted line. But look at the bright-side, Sarbanes-Oxley brings what Information Security Professionals have been wanting all along. I have personally seen several companies transform from having a weak security environment, to one that is quite respectable.

Pratical Assurance: Sarbanes Oxley now Controls the World

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Wednesday, July 26, 2006

Firms to miss SOX deadline

Rod Armitage, head of company affairs at the CBI, says those firms with 300 or more US shareholders must still comply with SOX, even if they do not trade in the US.

‘Sometimes there is no way of knowing daily if you have 300 US shareholders,’ he said.

Firms to miss SOX deadline

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Euronext seeks shield from Sarbanes-Oxley

Advisors negotiating the merger of Euronext and the New York Stock Exchange are working on a legal formula that would prevent any imposition of rigorous US Sarbanes-Oxley regulation on companies listed in Europe.

They are expected to take most of the rest of the year hammering out terms for the complex merger. The US Securities and Exchanges Commission has ruled out any importation of Sarbanes-Oxley, put in place after the various Wall Street scandals, to Europe.

Euronext seeks shield from Sarbanes-Oxley

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Big4Guy: Types of Material Weaknesses - Nature of Control Weaknesses

In some of my previous posts on material weakness I have discussed the
definition of material weakness, how one can identify material weaknesses and steps that can be taken to remediate such material control weaknesses. Today, I would be discussing as to how you can classify material weaknesses so as to address them correctly. For simplicity, I normally categorize material weaknesses into two types.

Big4Guy: Types of Material Weaknesses - Nature of Control Weaknesses

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Time running out for Sarbanes-Oxley compliance

Like it or not, the clock is ticking for non-US companies that need to be compliant to one of the most talked-about elements of the Sarbanes-Oxley (SOX) Act established in 2002.

With the passing of the critical 15 July milestone for foreign companies listed in the US to be compliant to Section 404 under SOX, they now have anything from a few weeks to nearly a year to meet the regulations or face the consequences. Under Section 404, publicly traded companies must have internal policies and controls in place to protect, document and process information for financial reporting.

The law requires affected businesses to comply by the end of their respective financial year after 15 July, 2006. The date is an extension of the original deadline of 15 July, 2005, set by the US Securities and Exchange Commission (SEC). Public US companies were required to be compliant in November 2004.

Time running out for Sarbanes-Oxley compliance

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Tuesday, July 25, 2006

Improving Sarbanes-Oxley Internal Compliance with Effective Content Protection Controls

A key requirement of the Sarbanes-Oxley Act is the definition, documentation, implementation and assessment of effective internal controls. These controls are seen to ensure the integrity of corporate financial information and the prompt reporting of material events which may affect the financial performance of the firm. While initial compliance efforts have been focused largely on financial reporting, this paper argues that the scope of Sarbanes-Oxley is far broader and requires corporations to develop effective internal controls for protecting their key digital assets in a number of areas. We refer to these controls as "Content Protection Controls."

The paper begins by discussing content protection controls from a senior management
perspective.

Improving Sarbanes-Oxley Internal Compliance with Effective Content Protection Controls

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Top 10 Trends in Business Intelligence, Part 2 What Do They Mean to Manufacturing Companies?

For manufacturers, regulatory requirements make enterprise data transparency particularly important. New environmental regulations such as the European Restriction of Hazardous Substances (RoHS), Title 49 CFR: Hazardous Materials Regulation, Title 40 CFR: Protection of Environment, and Waste from Electrical and Electronic Equipment (WEEE) make it particularly important for manufacturers to be able to certify that their products do not contain restricted hazardous substances, which will be difficult to do without achieving some level of enterprise data transparency. Of course, Sarbanes-Oxley is also very high on the list of regulatory requirements that call for heightened enterprise data transparency.

Top 10 Trends in Business Intelligence, Part 2 What Do They Mean to Manufacturing Companies?

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NYSE-Euronext merger deal may include anti-Sarbanes-Oxley break-up clause

Lawyers and regulators are working on adding a clause to the merger agreement between Euronext NV and NYSE Group Inc which would break up the deal if any attempt was made to apply the Sarbanes-Oxley US corporate reporting rules to companies listed on the combined group's European exchanges, L'Agefi financial daily reported, citing an unidentified financier.

NYSE-Euronext merger deal may include anti-Sarbanes-Oxley break-up clause

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Monday, July 24, 2006

SEC Names Hewitt Chief Accountant

Conrad Hewitt, former chief financial regulator for the State of California, was named chief accountant of the Securities and Exchange Commission on Monday. He will oversee accounting interpretations, international accounting matters, and professional practice issues, for the SEC.

Hewitt also will lead several of the commission's projects related to corporate finance, including, implementing the Sarbanes-Oxley's Act's Section 404—the law's internal control provision—reducing complexity in accounting; enforcing compliance of U.S. Generally Accepted Accounting Principles; and promoting the convergence of U.S. and international accounting standards, specifically the coming together of GAAP and International Financial Reporting Standards, noted the SEC announcement.

SEC Names Hewitt Chief Accountant

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Sarbanes-Oxley Messes Up

We had the surprise recently of meeting a couple of people who think that Sarbanes-Oxley is working well. It is for them, anyway: They sell computer systems that help companies comply with the law. They said that it's also helping the companies that buy their systems: The information that management needs to control in order to comply with Sarbanes-Oxley is information that also helps them manage their actual businesses.

It's too bad that so many companies don't agree.

Many investors have forgotten what a big favor Democratic Sen. Paul Sarbanes of Maryland and Republican Rep. Michael Oxley...

Sarbanes-Oxley Messes Up

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Friday, July 21, 2006

Next from Sarbox: Industry Exemptions?

Dig up evidence of document retention procedures for auditors, or work on a viable treatment for prostate cancer. Print out screen shots that support testing of general computer controls, or answer an important phone call from a high net worth client. The choice is obvious for biotech and community bank executives who contend that meeting the Sarbanes-Oxley Act's Section 404 requirements are diverting money and attention away from conducting business in a more efficient manner.

Section 404 requires companies to detail and attest to their internal controls. And cost-benefit debate related to complying with the provision has been widely reported, with executives of smaller public companies contending that they are unfairly burden by the law. While that may be true—or not—there is growing concern among executives within certain sectors that they too are being unfairly burdened by 404 compliance.

Next from Sarbox: Industry Exemptions?

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Thursday, July 20, 2006

Electronic Discovery Law: Meeting the Demands of Document Retention -- SOX Compliance, Risk Reduction and Information Management

This "Live, Interactive Teleconference with Q & A Session" is scheduled for Wednesday, July 26, 2006, from 10:00 - 11:30 a.m. Pacific Time. Preston Gates partner Todd L. Nunn, will serve as a panelist serving practical strategies for reducing the risk associated with information management and preservation. For additional details on this conference sponsored by Strafford Publications, Inc.

Electronic Discovery Law: Meeting the Demands of Document Retention -- SOX Compliance, Risk Reduction and Information Management

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U.K. Firms Struggling with SOX 404

More than 100 U.K. companies are coming to grips with the more onerous internal control requirements of the Sarbanes-Oxley Act.

International companies with market caps of more than $135 million listed in the United States must be SOX-compliant for filings following July 15. U.K. companies are expected to spend $350 million to comply with SOX section 404, which mandates audits of internal financial controls.

U.K. Firms Struggling with SOX 404

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A Sarbox Legacy

Most CFOs won't forget Alan Beller. He is credited with overseeing the implementation of more than 15 rule-making efforts related to the Sarbanes-Oxley Act, including those requiring certification of the accuracy of financial reports by chief executive officers and chief financial officers. As head of the Securities and Exchange Commission's Division of Corporate Finance, Beller also oversaw the rule-making that produced the most significant reforms in decades to the securities offering process, and the first comprehensive SEC rules for registration and disclosure for the asset-backed securities market.

A Sarbox Legacy

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Take off the SOX

Corporate America largely regards the 2002 Sarbanes-Oxley accounting law as a settled matter. So, it's telling that the pressure keeps mounting to relieve smaller public companies of the evident burdens the law places upon them.

One of them, Gary Lessing, chief financial officer of cancer-drug developer Avalon Pharmaceuticals of Germantown, reports that nearly 2 percent of his company's $30 million in expenditures last year were related to Sarbanes-Oxley. The company, founded in 1999, has no sales as it awaits its oncological discoveries. That's typical in biotech, where products take years to reach the market. "Every dollar comes out of spending for novel therapeutics on cancer," he said.

Take off the SOX

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Opinion: Companies Failing To Protect Against Insider Threat From Software Developers

While regulatory standards such as Sarbanes-Oxley and HIPAA, including the open Web application project, address some security measures through an audit process, they fail to impose enterprisewide abstraction layers that prevent key IT users with application and/or database access from gaining direct access to critical financial data.

Instead, standards mainly focus on enforcing confidentiality. They provide general guidelines for companies to concentrate on access control issues, application configurations and code vulnerabilities.

Code reviews, which are usually performed by program team leaders and project managers manually, don't take into account systemwide malicious code that can be introduced by in-house developers. And to put it bluntly, code written at the unit level is free to do whatever programmers want it to do.

Opinion: Companies Failing To Protect Against Insider Threat From Software Developers

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Compliance and the Director

Today, that responsibility starts and frequently stops with the Directors. There is no mystery as to why this should be the case. The Enron, Tyco, WorldCom and Parmalat fraud scandals serve to bring compliance to the forefront of boardroom agendas. In each case, there was a clear connection between what the business did and the accounting of those activities. What is more, the recent wave of regulations affects every aspect of the business. Here I am thinking about both Sarbanes-Oxley and the new International Accounting Standards.

Sarbanes-Oxley is often characterised as a standard that only applies to US companies. However, any company that conducts business or is required to file financial and governance reports in the US will have Sarbanes-Oxley issues. Therefore, it is no surprise that Directors find themselves in the unenviable position of not only being master of the corporate purse strings but also as compliance gatekeepers. This need not be a bad thing.

Compliance and the Director

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Wednesday, July 19, 2006

US to International: Sarbanes-Oxley is good for you; I said, SARBANES-OXLEY IS GOOD FOR YOU

Christian Leuz, a professor of accounting at the University of Chicago, says that the time and costs associated with Sarbanes-Oxley compliance are no trivial matter for foreign companies.

On the other hand, being listed on a major U.S. stock exchange has clear advantages, and companies might have more to gain than to lose from complying with tough U.S. corporate governance laws associated with such listing, he told the Washington File July 18.

Companies from developing countries, in which institutions are often weak or underdeveloped, gain credibility with both U.S. and home-country investors when the investors know that those companies must comply with U.S. laws, Leuz said.

"It sends a pretty strong signal to the market: 'We are trying to do the right thing,'" he said.

US to International: Sarbanes-Oxley is good for you; I said, SARBANES-OXLEY IS GOOD FOR YOU

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WILLisms.com: Trivia Tidbit Of The Day: Part 348 -- Sarbanes-Oxley Is Bad For America.

Sar-Box makes it almost not worth it to be a public company. And who could have expected anything else? That's what overkill regulations like the Sarbanes Oxley Act do-- they drive entrepreneurs elsewhere. They drive money away. They hurt business. They harm America.

WILLisms.com: Trivia Tidbit Of The Day: Part 348 -- Sarbanes-Oxley Is Bad For America.

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Compliance and BI: Same mission, different approaches

Compliance and business intelligence (BI) initiatives are designed to standardize the delivery of business information, yet both are afflicted by a lack of semantic consistency they are designed to solve. So how do you successfully define these different types of initiatives and ensure they effectively work together to achieve the same goal within your organization?

It would be wise for organizations embarking on compliance initiatives to leverage the work of BI professionals. One way to do this is to extend an existing data warehouse or data warehousing architecture to deliver financial reports. Well-designed BI environments already have the infrastructure, tools, processes and checks to collect, validate, integrate and populate financial information into database management systems designed to support financial analysis and reporting. This infrastructure is invaluable and can help organizations accelerate their progress toward meeting Sarbanes-Oxley and other requirements.

Compliance and BI: Same mission, different approaches

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Tuesday, July 18, 2006

Sarbox deadline arrives

The deadline for non-US firms to comply with the US Sarbanes-Oxley law was reached last Friday, two years after the same rules were imposed on their US counterparts.

For many firms, preparations for Sarbox began early last year. Initial spend targeted areas such as consulting, audits, workflow and planning.

Sarbox deadline arrives

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Sarbanes-Oxley spurs firms to hoard cash

Sarbanes-Oxley compliance costs "have been substantial, diverting funds and probably even more importantly, some of the attention of chief executive officers and boards of directors from capital spending and R&D plans," Warsh said.

Warsh, a former White House aide in the Bush Administration, said Fed economists have had difficulty quantifying the costs because "proving the connection between executives' 'mind share' and capital expenditure rates is difficult."

Warsh said he did not believe that Sarbanes-Oxley was a simple one-way street and said companies are benefiting from the reforms.

Sarbanes-Oxley spurs firms to hoard cash

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Friday, July 14, 2006

Making the SOX Grade

Sarbanes-Oxley compliance has caused a lot of pain and suffering in IT organizations. The controls put in place to mitigate risks to financial reporting were adopted for unknown reasons, obtusely defined and onerous. A recurring theme over the past year has been one of “I don’t want an ‘A’ -- I just want to pass.” While the desire to avoid undo stress is understood, there is an approach that can yield not only an excellent grade, but avoid many stresses.

When we talk about controls for SOX compliance then, we are really talking about putting in place controls that specifically reduce risks to financial reporting to an acceptable level to management. We aren’t talking about eliminating risks -- but about taking actions to reduce them to a tolerable level such that functional area objectives and the goals of the organization are attained. To be specific from a terminology perspective, the remaining risk is known as “residual risk,” and the amount of risk that management and the board are willing to accept is known as the “risk appetite” of the entity. Shaped by this, the “risk tolerance” is the level of acceptable variation around objectives.

This is very, very important. Every organization is unique. It has its own culture, resources, goals and so on. The levels of risk appetite and risk tolerance will vary. As a result, so too will the controls and processes that are put in place.

Making the SOX Grade

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Sarbanes Oxley deadline today

Sarbanes Oxley legislation comes into effect tomorrow, dictating that all foreign firms with capital in excess of £75 million dealing with the US will be required to highlight potential flaws in internal accounting controls.

The most controversial section of the act among enterprises with transatlantic business connections, section 404 is designed to ensure that company assets are not misrepresented in accounting audits, as is often the case.

Sarbanes Oxley deadline today

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AICPA: Heading South?

The American Institute of Certified Public Accountants is on the move. Starting in August, the association is relocating many functions, including human resources, finance, and publishing, to Durham, N.C. With only about 50 employees — of the 400 positions affected by the move — making the transfer from the AICPA's current offices in New York, New Jersey, Texas, and Washington, D.C., some are wondering how well the organization will adjust to this latest disruption.

The implosions of Enron and other companies prompted the passage of the Sarbanes-Oxley Act of 2002 and the creation of the Public Company Accounting Oversight Board. The PCAOB assumed responsibility for setting the standards used to audit public companies — previously the purview of the AICPA. "The AICPA had no political capital during the final debate on Sarbanes-Oxley," says Daniel D. Morris, managing partner with Morris and D'Angelo, a San Jose–based accounting firm.

AICPA: Heading South?

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Sarbanes-Oxley Goes Global

According to critics, the Sarbanes-Oxley Act has caused a litany of ills: Executives are retiring early, public companies are going private, foreign firms are listing abroad and U.S. firms are losing their competitive edge. The sweeping law, written in the wake of the Enron scandal, has served as a scapegoat for all the evils facing corporate America since it was passed in 2002.

Starting Saturday, however, the law's foes will have one less reason to complain. Foreign companies listed on U.S. exchanges must start complying with Sarbanes-Oxley beginning with fiscal years ending after July 15, if their market capitalization exceeds $75 million.

Sarbanes-Oxley Goes Global

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Thursday, July 13, 2006

COSO: Internal Control over Financial Reporting -- Guidance for Small Public Companies (Executive Summary) (PDF)

This small business guidance takes the concepts of the 1992 Internal Control – Integrated Framework and demonstrates their applicability for achieving financial reporting objectives of smaller publicly traded companies.

COSO: Internal Control over Financial Reporting -- Guidance for Small Public Companies (Executive Summary) (PDF)

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COSO Rolls Out Guidance for Smaller Businesses

New guidance, stressing efficient application of effective internal control over financial reporting, was released this week by the Committee of Sponsoring Organizations of the Treadway Commission.

The document identifies a number of obstacles towards attaining cost-effective control, but argues that such challenges can be overcome. Specifically, the guidance makes recommendations for management philosophy, organizational structure, the assignment of authority and responsibility, and a number of risk assessment objectives, among others.

COSO's "Internal Control -- Integrated Framework" document, released in 1992, has served as the internal control standard for organizations implementing and evaluating internal control in compliance with the Sarbanes-Oxley Act of 2002.

COSO Rolls Out Guidance for Smaller Businesses

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Where's the Relief from COSO?

Small business are reacting with skepticism to the Committee of Sponsoring Organizations of the Treadway Commission's (COSO) claim that its newly-issued guidance for smaller firms will help them assess internal controls in a cost-effective manner.

The guidance, which supplements COSO's 1992 Internal Control-Integrated Framework, aims to reduce compliance burdens for companies with fewer financial and human resources by illustrating how firms can use different approaches and adapt their circumstances to compliance requirements. Most companies have referred to COSO's 1992 model to comply with the requirement to assess internal controls spelled out in section 404 of the Sarbanes-Oxley Act.

Where's the Relief from COSO?

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Sarbanes-Oxley deadline this weekend for many UK firms

This weekend, larger UK companies that are listed on US exchanges will pass the deadline for filing SOX-compliant annual returns. All these companies, those that are capitalised at greater than US$75 million, must comply with the obligations of the Sarbanes-Oxley Act (SOX) on their next set of returns filed after the 15th July, two years later than their US equivalents. Foreign companies with a capitalisation of less than $75M have a year's grace – but the majority of UK firms impacted are those larger and global firms and few are expected to fall below the cut-off point.

Sarbanes-Oxley deadline this weekend for many UK firms

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deal architect : SOX SUX

This continues a series of my posts on Sarbanes Oxley. This one is about a viewpoint from academia. Courtesy of Thomas Otter, I saw this paper “The Sarbanes-Oxley Debacle: What We've Learned; How to Fix It” by Prof. Henry N. Butler of Chapman U. and Prof. Larry Ribstein of University of Illinois College of Law

deal architect : SOX SUX

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Sarbanes-Oxley concept reform welcomed

A concept release of the Sarbanes-Oxley reform has been published by the Securities and Exchange Commission (SEC) to a warm reception from the Biotechnology Industry Organisation (BIO).

Jim Greenwood, president and chief executive officer of the BIO, has said that he "supports" the act and plans to aid the SEC ensure that it does not impose too heavy a burden on small firms.

Sarbanes-Oxley concept reform welcomed

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Sarbanes-Oxley deadline up this week

The FT recently reported that many British companies are struggling to meet the 15 July deadline and many are looking for "quick fix" solutions to make them compliant, especially with regard to the disliked section 404.

As part of the act, section 404 requires a management assessment of internal controls within a company's annual reporting, providing a statement on the responsibility for internal controls, and demonstrating that these controls are adequate for accurate complete financial reporting.

Sarbanes-Oxley deadline up this week

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Wednesday, July 12, 2006

Who Really Catches The Crooks?

The latest corporate scandal is the backdating of executive stock options. Until recently, options cost a company nothing when they were issued, but the lower the issuing price, the more the executives profited from subsequent appreciation of the company's stock.

Before the Sarbanes-Oxley Act of 2002, new options didn't need to be reported for 40 days (now it's two). So corporations had over a month during which, it appears, some "backdated" the dates on which options were issued to fall on their stocks' low points.

Who Really Catches The Crooks?

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Ring Around the White Collar

Yet now America is losing its position as one of the most favorable countries in the world to do business. The reason is the government's obsession with white-collar crime as manifest by such inhibitors of business as the Sarbanes-Oxley Act.

The law was passed by Congress as a typical overreaction to the white-collar criminals of the 1990s, most of whom were prosecuted and jugged without resort to Sarbanes-Oxley. It has always been illegal to defraud. What Sarbanes-Oxley has achieved is the stifling of honest business dealings. It has placed redundant accounting regulations on business and nearly criminalized serving on the board of directors, whether the board be that of a giant corporation or a local publicly-traded plumbing company. The cost of Sarbanes-Oxley has driven IPOs abroad and persuaded entrepreneurs to forego IPOs entirely, denying them access to public capital, to growth, and to job creation.

Consequently the business climate in the United States has turned sour. The business climate in places like London is less risky and IPOs that might have been issued here are now issued in London. The London Stock Exchange markets itself as "A Sarbanes-Oxley Free Zone." London is prospering, a businessman told me the other day, because of North Sea oil and "Sarbanes-Oxley, which has encouraged Americans to take their IPOs here."

Ring Around the White Collar

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Corporate Governance Blog: Getting Downgraded: Filing Delinquencies Can Be a Big Tipoff

According to a study recently released by Moody’s Investor Services, filing delinquencies are a strong indicator of bigger control problems.

In general, disclosing a material weakness does not necessarily result in a credit downgrading by Moody’s. It all depends on whether the auditor can effectively “audit around” the material weakness or whether it relates to a pervasive problem at the company-wide level. Obviously, the more pervasive the problem, the more likely Moody’s will downgrade the credit rating.

Moody’s considers filing delinquencies to be a pretty good indicator that the company has bigger problems. In fact, their study indicates that delinquent filers “have been largely unsuccessful in remediating problems,” and that 86% “either remained delinquent or continued to report material weaknesses” in the following year.

Getting Downgraded: Filing Delinquencies Can Be a Big Tipoff

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Jottings by an Employer's Lawyer: 1st Test of SOX Preliminary Reinstatement Saga Continues

The ongoing saga of David Welch, who more than 2 years ago was "reinstated" under Sarbanes Oxley, continues with his filing of a motion in federal district court to force his former employer Cardinal Bankshares to take him back as CFO. A magazine with an interetest in the subject, CFO.com, has the latest development, Feds Back Sarbox Whistle-blower.

Jottings by an Employer's Lawyer: 1st Test of SOX Preliminary Reinstatement Saga Continues

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Big4Guy: Sarbanes Oxley Journal Entry Fraud Detection

Statement on Auditing Standard No.99 Consideration of Fraud in a Financial Statement Audit talks about how fraud can affect an organizations financial statements. Recent studies in fraud reveal that most financial statement fraud is done through journal entries. Auditing journal entires for fraud can be uphill task for auditors. Journal entries if audited properly can provide evidence of material mis-statement due to fraud. An auditor needs to take a step by step approach to auditing journal entries. Here is starting guide for auditing journal entries.

Big4Guy: Sarbanes Oxley Journal Entry Fraud Detection

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Chinese Firms Feeling Pressure From Sarbanes-Oxley Act

July 15 will be the final validation deadline of Sarbanes-Oxley to US listed foreign companies and US SMEs, Chinese Nasdaq listed Internet companies are working overtime to meet the July 15 deadline for the Sarbanes-Oxley Act, reports China Business News. Hurray (Nasdaq: HRAY) CFO Liu Xiaoxi said the Sarbanes-Oxley Act is an unbearable burden to Chinese companies. Sohu CFO Yu Chuyuan said the team has worked overtime for over one year in order to meet the requirements of the Sarbanes-Oxley Act. Liu said the costs to meet Sarbanes-Oxley requirements are affordable to China's US listed telecom operators, but the US$500,000 to US$1 million cost is almost impossible to bear for Chinese Internet companies. Some Chinese high-tech companies are re-considering US listings in-lieu of the new regulations, said the report.

Chinese Firms Feeling Pressure From Sarbanes-Oxley Act

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SEC Proposes Easing Sarbanes-Oxley Compliance Costs

Bowing to pressure from many interest groups, the Securities and Exchange Commission plans to enact a rule that will cut the costs to comply with the Sarbanes-Oxley Act.

The SEC yesterday requested detailed comments from interested parties.

SEC Proposes Easing Sarbanes-Oxley Compliance Costs

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Tuesday, July 11, 2006

voiceofsandiego.org: Opinion... The Kroll Offensive

The mayor is right to put the blame in three places: Kroll, a private corporation with a profit motive; the original contract with the firm, structured by city officials and Kroll; and the imposition of the Sarbanes-Oxley Act upon the city -- the first instance of a municipality facing it in the post-Enron era.

The result: an ill-defined engagement that has allowed Kroll unfettered power to run roughshod over the city.

To do so, Kroll has ironically used the very controls Congress implemented to curb corporate excesses. The Sarbanes-Oxley Act was Washington's reaction to the accounting scandals that led to the wild, fraudulent successes of corporate America a half-decade ago. However, the financial controls aren't made for municipalities -- they're made for corporations. The attempt to force these mandated corporate practices on a taxpayer-funded organization has proved to be a costly disaster for the residents of San Diego. The audit committee that has resulted looks little like those envisioned in Sarbanes-Oxley.

In the future, other municipalities will surely run afoul of the Securities and Exchange Commission and will be in need of the type of services Kroll was supposed to produce for San Diego.

voiceofsandiego.org: Opinion... The Kroll Offensive

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Will COSO Small Biz Guidance Really Help?

Internal controls haven't made executives at many small companies happy lately, as they struggle to comply with Sarbanes-Oxley regulations.

But you wouldn't know that from Tuesday's quirky introduction to new guidance intended to help those smaller companies assess their controls. "People in control are happy people," declared Dave Richards, president of the Institute of Internal Auditors, brandishing a large drawing of a smiley face.

Will COSO Small Biz Guidance Really Help?

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SEC Moves Forward on Sarbanes-Oxley 404 Improvements

The Securities and Exchange Commission, in another step toward improving the implementation of the Sarbanes-Oxley investor protection law, today published a Concept Release as a prelude to its forthcoming guidance for management in assessing a company's internal controls for financial reporting.

Following its May 10, 2006, Roundtable devoted to Sarbanes-Oxley Section 404 implementation issues, the Commission issued a roadmap for improvements entitled "Next Steps for Sarbanes-Oxley Implementation" (SEC Press Release 2006-75, May 17, 2006). Today's issuance of the Concept Release is one of the milestones on that roadmap, and it brings the SEC one step closer to issuing guidance for management that has been lacking since the law was enacted in 2002.

At the Roundtable, the Commission learned from participants that while Section 404 has produced benefits, its implementation has been unduly costly. The Commission also received specific feedback about issues that remain to be addressed, and actions that the SEC and the Public Company Accounting Oversight Board could take to make the internal control assessment and auditing more efficient and more effective. A separate Advisory Committee on Smaller Public Companies reported, following a year-long study, that companies which have not yet undertaken the process have special concerns with both costs and procedures. The planned guidance for management which is the subject of the Concept Release is intended to assist in dealing with all of these issues and concerns.

"Our goal is to develop practical guidance for companies to help improve the reliability of financial reporting and to make Section 404 implementation more efficient and cost effective for investors," said SEC Chairman Christopher Cox. "The public comment we receive in response to today's Concept Release will help the SEC write meaningful guidance for all public companies — large, small, foreign, and domestic — for the benefit of all of their shareholders."

The Commission anticipates that the forthcoming guidance for management will cover at least these areas:

Identifying risks to financial statement account and disclosure accuracy and the related internal controls that address the risks, including how management might use company-level controls to address the risks
Objectives of the evaluation procedures and methods or approaches available to management to gather evidence to support its assessment
Factors management should consider to determine the nature, timing, and extent of its evaluation procedures
Documentation requirements, including overall objectives of the documentation and factors that might influence documentation requirements

The Concept Release seeks feedback on each of these topics and on whether guidance should be provided in other areas as well.

"Quality financial reporting is a critical cornerstone to our capital markets, and investors are entitled to rely upon it. Section 404 has a key role to play in enhancing the reliability of public companies' financial statements," said John W. White, Director of the Division of Corporation Finance. "I hope the Commission's issuance of the Concept Release will garner useful and broad-based public comment as we move forward in our efforts to improve the implementation of Section 404 for issuers and investors alike."

SEC Acting Chief Accountant Scott Taub said, "The guidance we issue should help companies further improve and streamline their processes for assessing the effectiveness of internal controls. We intend for the guidance to be flexible and scalable, such that it will assist companies of all sizes."

The Commission continues to move forward on the other steps it announced in May, and will be sensitive and responsive to the particular needs of smaller issuers, both domestic and foreign, while seeking to reduce costs and facilitate a more efficient and effective process to minimize the burdens that Section 404 may impose. The Commission and its staff will also continue to work with the Public Company Accounting Oversight Board on revisions to Auditing Standard No. 2, which implements Section 404 for auditors, so that it will more efficiently and workably protect investors in companies of all sizes.

SEC Moves Forward on Sarbanes-Oxley 404 Improvements

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NEW COSO Guidance for Small Companies

The new framework is now available from COSO on refined guidance for small companies.

Visit the COSO site for details from today's webcast. A free copy of the Executive Summary and set of FAQs will be available for download on the day of the webcast (today).

Electronic or printed copies of Internal Control over Financial Reporting – Guidance for Small Public Companies can be ordered at https://www.cpa2biz.com/stores/coso3.

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Two Sides on Sarbanes

Congress and the Securities and Exchange Commission are pushing in opposite directions about whether the Sarbanes-Oxley Act should apply to all public companies.

Congress is considering bills in both houses that would exempt "smaller firms"—those with under $700 million market capitalization—from filing reports on internal accounting controls, while the SEC says all public companies will eventually be required to file such reports.

Section 404 of the Public Company Accounting Reform and Investor Protection Act of 2002 (better known as Sarbanes-Oxley or SOX) requires public companies to audit their internal financial control systems and identify any "material weaknesses." Sarbanes-Oxley, passed in the wake of several high-profile financial scandals, is intended to ensure greater accountability in public companies’ reporting and accounting practices.

Two Sides on Sarbanes

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Pain blamed on US red-tape zealots eager to tick boxes

Think about your morning routine, says Eric Hutchinson, chief financial officer of Spirent Communications. "We all get up, clean our teeth and have a cup of tea. Well, imagine you have to document all that, explain any deviation from the normal routine and get your partner to certify it," he says.

"And every now and again an auditor will come round and check you've done it. That's what it feels like complying with Sarbanes-Oxley."

Yet experts say section 404, which contains rules on internal control reporting, has been made more painful than it needs to be by overzealous box-tickers, who have not grasped the law's origins or intentions.

"The way auditors are approaching compliance has been incredibly detailed, staggeringly detailed," says Mr Hutchinson. "They were putting in controls that were over the top."

Pain blamed on US red-tape zealots eager to tick boxes

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Pain blamed on US red-tape zealots eager to tick boxes

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Pain blamed on US red-tape zealots eager to tick boxes

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D.C. Insiders Debate Sarbanes-Oxley

A trio of Congressmen and a senior Treasury official gathered yesterday in Washington, D.C., to debate the Sarbanes-Oxley Act.

The discussion was sponsored by the Financial Services Forum, a trade group comprised of the nation's 20 largest financial institutions.

D.C. Insiders Debate Sarbanes-Oxley

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Study: Sarbanes Costs Lower, Audit Fees Higher

The overall cost of being public in 2005 dropped slightly from the historic levels seen in 2004, according to the fourth annual study conducted by Foley & Lardner LLP on the costs associated with corporate governance reform. However, audit fees continued to increase.

The study revealed that costs associated with corporate governance reform dropped 16 percent for companies with under $1 billion in annual revenue and 6 percent for companies with over $1 billion in annual revenue.

These reductions between 2004 and 2005 were driven by large decreases in costs associated with lost productivity, legal fees and initial corporate governance reform set-up costs. However, these decreases were largely offset by year-over-year increases in audit fees, D&O insurance and board compensation for companies of all sizes.

Study: Sarbanes Costs Lower, Audit Fees Higher

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Monday, July 10, 2006

Quarles:US Should Look To Make Sarbanes-Oxley Less Costly

The U.S. government should look for ways to reduce the costs of compliance with Sarbanes-Oxley accounting and corporate governance laws, a senior U.S. Treasury official said Monday.

U.S. Treasury Undersecretary for Domestic Finance Randal Quarles said it isn't clear whether the rigors of the Sarbanes-Oxley Act of 2002, passed by Congress to toughen corporate reporting in the wake of scandals at Enron and Worldcom, have made U.S. capital markets less attractive in comparison to markets in Europe and Asia. Still, he said, the U.S. can't afford to take its competitive domination in the area of capital markets for granted.

"We need to understand the costs of compliance and we need to think about an intelligent and appropriate way to bring those compliance costs down," Quarles said.

Quarles:US Should Look To Make Sarbanes-Oxley Less Costly

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Forum holds debate on Sarbanes-Oxley

Hours after Henry Paulson, the onetime chairman of the Financial Services Forum, was sworn in as treasury secretary, the Forum yesterday assembled a senior treasury official and three House members for a debate on the costs and benefits of Sarbanes-Oxley, 2002's sweeping corporate-governance law.

Rep. Tom Feeney (R-Fla.), who continues to push legislation granting smaller public companies a reprieve from Sarbanes-Oxley's auditing rules, used his appearance at the debate to play up the comparative advantage that the law gives to overseas financial markets, many of which lack the United States' strict corporate-governance laws.

Forum holds debate on Sarbanes-Oxley

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SEC and PCAOB Seriously Underestimate Investor Anger Over Backdating

Interesting piece in the Wall Street Journal on Friday: the SEC has asked the Public Company Accounting Oversight Board [PCAOB] to sit on its planned alert for getting auditors to consider “options-grant issues they should examine in audits, the people familiar with the matter said. The board also wanted to tell auditors that they should examine past auditing practices related to options grants if there was an indication of problems with them.”

SEC and PCAOB Seriously Underestimate Investor Anger Over Backdating

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Who's In Control?

Everyone’s been complaining about Sarbanes-Oxley and other government induced compliance formulae for several years now (everybody, of course, except the auditors and consultants who make a ton of money on compliance and related activities). Technology has become part of the compliance process in some very important ways. Let’s talk about the role that IT governance plays in compliance and the frameworks out there to help us all stay legal.

The Control Objectives for Information and Related Technology (COBIT) framework -- according to the Information Systems Audit and Control Association (ISACA) -- is:

“An IT governance framework and supporting toolset that allows managers to bridge the gap between control requirements, technical issues, and business risks. COBIT enables clear policy development and good practice for IT control throughout organizations. COBIT emphasizes regulatory compliance, helps organizations to increase the value attained from IT, enables alignment and simplifies implementation of the COBIT framework.”

Who's In Control?

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Foreign groups face Sarbanes-Oxley deadline

Foreign companies listed in New York are entering a crunch period this week as a Sarbanes-Oxley deadline passes and time constraints force some into compliance short cuts, according to auditors and advisers.

Companies whose financial years end on or after this Saturday must ensure their next annual filings comply with the Sarbanes-Oxley accounting and governance law, including its notorious section 404.

Foreign groups face Sarbanes-Oxley deadline

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Friday, July 07, 2006

Risky days for outside directors

Following Enron and WorldCom scandals, and the Sarbanes-Oxley governance reforms that resulted, corporate board-sitting became a bit more professional -- and much more public. The "casual director" no longer exists, reports executive search firm Korn/Ferry International.

In its annual survey of corporate boards, Korn/Ferry reported in February that 59 percent of directors said they had declined a board seat because of the "perceived risk" of personal liability in the job due to Sarbanes-Oxley. A nearly equal number -- 58 percent -- said they'd like to see SOX repealed because it has made boards overly cautious.

And it's easy to see why directors may be nervous: Last year, 11 former directors of WorldCom -- including Francesco Galesi, chairman of the Rotterdam-based Galesi Group -- agreed to pay $55.25 million to settle a class-action shareholder suit alleging they failed to stop the $11 billion accounting scandal that brought down the company. Nearly half of the settlement money came out of their own pockets.

Risky days for outside directors

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Nonprofits, Governement Enitities Wearing Their Own SOX

Four years after its enactment, the Sarbanes-Oxley (SOX) accounting reform law, designed primarily for public company reporting, is having major impact on the nonprofit sector and on state and local governments.

"Sarbanes-Oxley's impact has been far broader than its supporters intended or envisioned," James K. Gentry, a professor and former dean of the School of Journalism and Mass Communications at the University of Kansas, writes in a posting on the businessjournalism.org Web site. The impact has been especially pronounced on nonprofits.

Nonprofits, Governement Enitities Wearing Their Own SOX

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Survey: CFOs more certain about technology

Among public companies, 39 percent of CFOs polled feel most confident about the level of internal controls and corporate governance in their organizations, suggesting the impact of the Sarbanes-Oxley Act.

"Many companies have invested in technology over the past few years to update obsolete systems and improve operational efficiencies," says Paul McDonald, executive director of Robert Half Management Resources. "The Sarbanes-Oxley Act has prompted public and private companies to better align their technology and finance functions. Replacing outdated business software with newer systems has enabled firms to capture essential data for more accurate financial reporting, and thus meet critical accounting mandates."

Survey: CFOs more certain about technology

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Stolen Thunder: Enron - Repeating The Basics

But I was going to answer the claim that Lay lined his pockets, and that Enron is why we have Sarbanes-Oxley. Well, last question first. A lot of people forget Arthur Andersen's role in the Enron collapse--if AA has just done it's job, the financial reports would have made the conditions clear long before the company collapsed. And let's not forget Worldcom or Adelphia, Xerox or Tyco; frankly there was a great need for better reports. And as annoying as it is to meet Sox standards, it does what it is supposed to do; gives investors and the public a clearer look at what is going on in major corporations, sp folks can have better confidence in those companies. And while some companies would rather leave the country than meet those standards, to my mind that speaks to the level of stability and transparency those companies maintain--I'd just as soon not invest there anyway, thanks.

Stolen Thunder: Enron - Repeating The Basics

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Thursday, July 06, 2006

Steve Forbes: Why Still-Tame Animal Spirits?

Corporate chieftains often complain about the pressure from Wall Street for short-term results. The Street's current obsession with profit margins is what you might call an M.B.A. version of this myopic attitude.

What's amazing is the fact that America's stock exchanges--supposed bastions of vibrant capitalism--are now so risk-averse, the opposite of the anything-goes attitude of the late 1990s. Fear is the unspoken byword today--Sarbanes-Oxley; the public's string-'em-up attitude toward corporate miscreants; and massive, disruptive change. Even once impregnable mainstays like daily newspapers wonder whether the Web will do to them what railroads did to the Erie Canal more than 150 years ago.

Steve Forbes: Why Still-Tame Animal Spirits?

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Jim Hamilton: Is Sarbanes-Oxley Chilling Foreign Issuers from Listing in US?

I have determined that this blog will not shrink from discussing the big macro issues of the impact of securities regulation on the financial markets and the movement of capital. And there is no bigger issue in this regard than the growing evidence that the Sarbanes-Oxley Act, and particularly its Sec. 404 internal controls mandates, are chilling foreign private issuers from listing on US exchanges.

The fact is that the number of foreign private issuers peaked at around 1300 just before 2002 and has not moved upward since the passage of Sarbanes-Oxley.

Jim Hamilton: Is Sarbanes-Oxley Chilling Foreign Issuers from Listing in US?

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Sox First: The unfinished business of Ken Lay's legacy

Neikerk is spot on when he suggests that in the years ahead, Sarbanes-Oxley will remain Ken Lay's legacy. Business might resent the legislation but if they look behind it they will find Enron's shadow.

"Though Lay died today from a massive heart attack, the post-Enron reforms that his company's bad acts inspired will live on and keep corporations on their toes. Many firms dislike these reforms, and claim that they force them to spend too much money following a law that requires them to insure their books are above board.
"But that's the price of credibility in today's corporate world. It's no longer business as usual."

Sox First: The unfinished business of Ken Lay's legacy

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FACTBOX: Stock option backdating red flags for investors

Backdating can also lead to accounting fraud if a company does not properly record the difference as a compensation expense. Experts describe backdating as essentially giving the option holder free money because the options are immediately worth more.

Many of the probes involve options granted before the 2002 Sarbanes-Oxley corporate reform law. Prior to that, companies had 40 days after the grant date to file a Form 4 with the U.S. Securities and Exchange Commission reporting a stock option grant. That gave a company a 40-day window to pick a grant date. Sarbanes-Oxley cut that reporting deadline to 48 hours.

FACTBOX: Stock option backdating red flags for investors

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Langberg: Options trouble at Mercury Interactive paints disturbing picture

You'd think all this bad news would be crushing to Mercury, a mid-sized company with about 3,000 employees.

But Mercury is profitable and, according to the current CEO on Wednesday, is growing faster than its competitors. Sales jumped to $843 million in 2005, from $686 million in 2004 and $506 million in 2003.

This means Mercury isn't another Enron or WorldCom, where panicked executives were trying to hide massive business failure. But the options violations at Mercury and other valley companies could trigger more regulation, in the same way the collapse of Enron and WorldCom led directly to Sarbanes Oxley.

What's more, Mercury has blown $70 million and untold hours of work time that could otherwise have gone to productive activity such as research and sales.

Langberg: Options trouble at Mercury Interactive paints disturbing picture

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Wednesday, July 05, 2006

Enron founder dies awaiting prison

The death of Enron Corp. founder Kenneth Lay was a final, unexpected chapter in a complex personal and corporate drama that played out in public view in the years since Enron's collapse into bankruptcy in late 2001.

Lay, 64, died early Wednesday morning in Aspen, Colo., while awaiting a judge's sentencing this fall that could have sent him to prison for decades. He died from coronary artery disease, according to Scott Thompson, the chief deputy coroner for Pitkin County, Colo.

He had been under enormous stress, awaiting sentencing after his conviction May 25 on multiple counts of fraud and conspiracy stemming from his actions in the weeks before Enron's demise.

Enron founder dies awaiting prison

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Venture-Backed IPOs Almost Double in 2Q

"Many emerging companies just can't afford the costs associated with going public in the U.S., particularly since Sarbanes-Oxley kicked in a few years ago," said Mark Heesen, president of the NVCA, the industry's trade body.

He was referring to the Sarbanes-Oxley corporate-governance act. Small companies have said the rules are too costly, making them pay for a variety of things such as new software and additional accounting work.

And while companies that went public during the second quarter also enjoyed larger offering sizes and post-offering values than they did 18 months ago, the volatility of the last couple of weeks has made for some disappointing stock prices.

Venture-Backed IPOs Almost Double in 2Q

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The Swamp: Ken Lay's gone, his impact remains

Kenneth Lay of Enron changed American business, but probably not in the way that he would have preferred. Reaction to his company's rapaciousness went beyond the indictments and convictions, beyond the justifiable anger of shareholders and employees who lost their shirts.

Congress passed the Sarbanes-Oxley law requiring more accountability by corporations, their leaders and their boards of directors. There is much more focus these days on conflicts of interests in business, and the auditing profession has had to change its cozy ways in order to maintain credibility.

The Swamp: Ken Lay's gone, his impact remains

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Spansion Selects Movaris for Sarbanes-Oxley Compliance

Movaris, a software company that helps finance teams automate and unify their financial close, SOX compliance and financial reporting processes, today announced that Spansion (NASDAQ:SPSN), the world's largest pure-play provider of Flash memory solutions, has purchased the Movaris Sarbanes-Oxley solution to assist in the automation of its compliance processes for its worldwide operations.

Spansion is using Movaris Sarbanes-Oxley Compliance, part of the Movaris OneClose solution, to evaluate and test internal controls throughout its finance operations. Movaris provides efficiencies with configurable workflows, advanced productivity capabilities, control performance analytics, and integration with third party applications.

"The Movaris Sarbanes-Oxley solution is helping Spansion manage complex compliance processes and better understand the internal controls we need to track," said Michael Haanen, SOX project manager at Spansion. "With the additional automation assistance, we expect to free up resources for more analysis and planning to improve the overall efficiency of Spansion's compliance process."

With Movaris OneClose, companies can efficiently unify the financial close, SOX compliance, and financial reporting into a single, streamlined process. By taking this approach, Movaris customers realize more time for strategic analysis by automating routine workflows, reduced audit fees from auto-generated evidence binders, and increased accuracy of financial reports by unifying and standardizing key business processes throughout the global finance organization.

Spansion Selects Movaris for Sarbanes-Oxley Compliance

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Monday, July 03, 2006

Organizations may be overreacting when hiring scandal-linked executives

There has been much debate of the appropriateness of Sarbanes-Oxley and other regulatory initiatives to improve corporate governance in the wake of major business scandals. However, in the area of executive recruitment it would seem that corporate America has been more than adequate in policing itself, as executives with even remote ties to scandal ridden businesses have become persona non grata. But, according to Jo Bennett, partner at Battalia Winston International, in many cases the marketplace is overreacting as individuals that had nothing to do with well publicized scandals are being penalized.

"Many organizations refuse to interview candidates who come from 'tainted' companies even though the individual may not have been accused of any misdeed," said Bennett. Although an organization may benefit from this overreaction by not running the risk of being criticized for recruiting a person with any hint of scandal, that same company may also miss out on hiring a talented person that could make a positive difference.

Organizations may be overreacting when hiring scandal-linked executives

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Big4Guy: Sarbanes Oxley Audit Scope Limitations 404

Over the past few months, I have been trying to throw more light on the overall Sarbanes Oxley compliance process. Today, I am talking from the point of view of the auditor attesting a company's financial statements. What protocol should the auditor follow in case of a scope limitation in a sarbanes oxley engagement. Due to circumstances, an auditor may face restictions in scope, in which case he has the following options...

Big4Guy : Sarbanes Oxley Audit Scope Limitations 404

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Is Exec Compensation the next Sarbanes-Oxley?

According to a recent article the subject of executive compensation is about to be the next major corporate governance topic. The lack of moderation demonstrated by super sized compensation packages has caught the Securities Exchange Commission’s attention and has teed up the issue of reform.

"Whatever the market can bear" is an oft heard phrase; but, a market with imperfect information due to incomplete disclosures means that shareholders are paying out fatter paychecks than they bargained for. Royal compensation packages that bear no relationship to the company’s actual performance once again point to the failure of independent directors.

Is Exec Compensation the next Sarbanes-Oxley?

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Canadian IT Manager : Sarbanes-Oxley Presentation to VANTUG

Much of the IT industry, especially in smaller companies, is only now coming to the realization of the impact of Sarbanes-Oxley or SOX. Denis Drouin of Ernst & Young gave a very interesting and informative talk to an enthusiastic group of VANTUG members on June 21. Denis works as a SOX IT Auditor and has been 'very' busy over the past couple of years! Judging by the audience reaction and questioning a good deal of what Denis presented was something of an 'eye-opener'. For example, all publicly traded companies regardless of market cap must comply. The penalty for persistent non-compliance or refusal to comply can be a 'cease trading' order.

A number of people were under the mistaken impression that 'smaller' companies were exempt. The only concession to 'smaller' companies (defined as under $75 million market cap) is an extension to the compliance date until the end of this year. The object of SOX is to make company executives formally financially accountable to their shareholders. IT is affected in that the company's financial and business systems are usually managed via IT systems. The auditors must be satisfied that the company financials are true and correct. Typically 2 different audits are involved; one is a straight financial audit to look for 'creative' accounting and an IT audit to demonstrate that the data that is used in the company financials has been processed correctly and is not open to any form of tampering from inside or outside of the company.

Canadian IT Manager: Sarbanes-Oxley Presentation to VANTUG

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Kelly seeks fairer regulation for smaller businesses

Saying that modifications are needed to ensure the Sarbanes-Oxley Act does not continue to have unintended negative consequences on smaller businesses, U.S. Congresswoman Sue Kelly helped organize a Congressional field hearing in New York City today to analyze the law and discuss potential reforms.

"Small employers in New York's Hudson Valley and around the nation have experienced problems meeting the costs imposed by regulators' interpretation of the law," Kelly said at the hearing, which took place at the U.S. Customs House in Manhattan.

"When Congress passed the Sarbanes-Oxley Act, it never intended to force any company to choose between following the law or creating jobs," Kelly added. "Sadly, bureaucratic regulation has chosen to interpret the law in ways that no longer seem to make sense."

Kelly seeks fairer regulation for smaller businesses

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