Sunday, April 29, 2007

The Enron attitude is still alive and kicking

The ghost of Enron still haunts Charles Niemeier.

More than five years after the energy trader's collapse, Niemeier worries that the lessons of its failure are being ignored.

"What scares me the most about Enron is not what they did wrong, but what they did right," he said. "They took the rules and used them to build a massive illusion."

Niemeier, a member of the Public Company Accounting Oversight Board, fears too many companies see Enron as an aberration rather than a symptom of a larger problem.

The Enron attitude is still alive and kicking

Labels: enron, pcaob

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Senate rejects Sarbanes-Oxley change

The U.S. Senate on Tuesday defeated a Republican attempt to weaken 2002's post-Enron Sarbanes-Oxley laws by making it optional for many corporations to comply with a controversial section on internal controls.

By a vote of 62-35, the Senate set aside an amendment to make compliance with Sarbanes-Oxley's Section 404 optional for companies with total market value of less than $700 million.

The amendment was offered by South Carolina Republican Jim DeMint, who tried to attach it to a bill on the Senate floor that was focused chiefly on boosting investment in research, and improving science, engineering and math education.In response to the amendment, defenders of Sarbanes-Oxley proposed and won passage, by a vote of 97-0, of a symbolic Senate statement expressing support for efforts already under way by federal regulators to fine-tune Section 404.

Senate rejects Sarbanes-Oxley change

Labels: 404, sarbanes oxley, senate

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SEC's Cox sees common accounting standards by 2009

SEC's Cox sees common accounting standards by 2009

Labels: GAAP, sec

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Thursday, April 19, 2007

Will the SEC Embrace a Softer Sarbanes-Oxley?

When the Sarbanes-Oxley (SOX) Act was passed by Congress and signed into law in 2002, its goal was to protect investors through increased disclosure and stiffened internal controls. The law was passed following accounting frauds at Enron, WorldCom and other U.S. companies.

But on April 4, 2007, the Securities and Exchange Commission announced it will revisit some of SOX's rules. The primary focus will be the heavy financial costs of Section 404, which requires auditors of most publicly listed companies to verify the effectiveness of the company's internal controls and procedures for financial reporting.

Will the SEC Embrace a Softer Sarbanes-Oxley?

Labels: congress, sec, sox

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Small biz hits Sarbanes-Oxley law

Lawmakers and regulators in Washington, D.C., yesterday heard an earful from small-business owners, including some from Massachusetts, who claimed the Sarbanes-Oxley Act is burdening firms and stifling growth.

Complaints ranged from the costs associated with the act’s accounting regulations to firms balking at going public if it means spending so much money complying with provisions.

“From my perspective as an entrepreneur, the atmosphere for raising capital in the U.S. has taken a turn for the worse,” said Joseph Piche, chief executive of Franklin-based Eikos Inc., a privately held nanotechnology firm. Piche, whose firm has explored going public, and others testified at a hearing of the U.S. Senate’s Small Business and Entrepreneurship Committee, headed by Sen. John Kerry(D-Mass.).

Small biz hits Sarbanes-Oxley law

Labels: small business, sox

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Testimony Concerning The Sarbanes-Oxley Act of 2002 and Its Impact on Small Businesses

Chairman Kerry, Ranking Member Snowe, and Members of the Committee:

I am pleased to appear today on behalf of the Public Company Accounting Oversight Board ("PCAOB" or the "Board"). to speak about the impact of the Sarbanes-Oxley Act of 2002 (the "Act") on small business, and, in particular, the PCAOB’s oversight of small audit firms. I am also pleased to join Chairman Cox before you today. The PCAOB works closely with the Securities and Exchange Commission ("SEC") to achieve our shared goal of protecting the interests of the investing public in the preparation of informative, accurate and independent audit reports on public company financial statements.

I. Introduction and Background

This Committee’s focus on small business and entrepreneurship and the Committee’s particular focus today on the impact of the Act are both appropriate and very timely. The PCAOB, along with our colleagues at the SEC, are in the final stages of replacing Audit Standard 2, which I will later describe in greater detail. A priority concern that triggered our current efforts is the desire to assure that the audit standard mandated by the Act can be conducted in a manner consistent with the size and complexity of America’s small publicly traded companies.

Testimony Concerning The Sarbanes-Oxley Act of 2002 and Its Impact on Small Businesses

Labels: AS2, pcaob, small business

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Wednesday, April 18, 2007

Speech By SEC Commissioner Roel C. Campos: Remarks Before The IOSCO Annual Conference

Good morning. At the outset, I'd like to thank M. Damodaran for being such an excellent host to this conference. In addition, it's definitely a pleasure to be part of such a distinguished panel, and I appreciate all of the work that Arthur Doctors van Leeuwen has done in organizing the topics for it. In any event, before I begin, I must remind you that the comments I make today are my own and do not reflect the opinions of the staff or the other Commissioners of the Securities and Exchange Commission.

Let me start by noting that in the nearly five years in which I've worked with IOSCO, I've never seen more interest with respect to the growing globalization of the securities markets and international securities regulation than in the last few months. Perhaps this is just an American perspective and that we're just late to the party, but I do sense that we may be approaching critical mass on some of these issues.

Of course, much of what I'm referring to does not directly involve audit or accounting standards, but rather concerns the fact that there has been increasing globalization of the securities markets. Most notable is the recent NYSE-Euronext merger, which I think will add significant pressures to the desire for seamless global securities trading and will likely bring requests from the combined entity to allow the sale of listed European securities in the U.S., and vice versa.

Speech By SEC Commissioner Roel C. Campos: Remarks Before The IOSCO Annual Conference

Labels: as5, GAAP, IFRS

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Oxley Unhappy with SOX; Blames PCAOB for Problems

Former Congressman Michael Oxley is unhappy with implementation of the corporate reform legislation that bears his name.

In an interview with CFO.com, he was asked, “Are you happy with the way Sarbanes-Oxley has been implemented?” His answer: “Not really. The law has gotten a lot of criticism.” He noted that the vast majority of the complaints center on Section 404, which requires an audit of internal controls over financial reporting.

“It was Auditing Standard No. 2, promulgated by the PCAOB (Public Company Accounting Oversight Board), that started all the problems,” he said. “It was two paragraphs long, but by the time the PCAOB was done, it was 330 pages of regulations. It was far too prescriptive and [more] expensive than anyone anticipated. So, [the PCAOB] and the Securities and Exchange Commission proposed a risk-based assessment to better define material weakness, with more emphasis on internal audit. It adds flexibility with smaller companies.”

Oxley Unhappy with SOX; Blames PCAOB for Problems

Labels: 404, AS2, Michael Oxley, pcaob, sarbanes oxley

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The High Cost Of Sarbanes-Oxley

Markets: Investors are taking companies private at a record pace. On Monday, it was Sallie Mae, the mammoth school-loan company, in a $25 billion deal. Do private equity firms know something the rest of us don't?

It sure seems so to us. Make no mistake about it: Sallie Mae is big, and dominant in its industry. More than a quarter of all college loans made in America have been made by Sallie Mae.

Sallie Mae's business relies on a unique symbiosis with the U.S. government. Since about 85% of its $142 billion debt portfolio is guaranteed by Uncle Sam, it's what economists call a "government-sponsored enterprise."

That said, Sallie Mae is just another company in a highly regulated industry that's going private. The last one to announce was Texas gas giant TXU Corp., in February. Maybe it's a sign that the recent surge in regulation of public companies has gone too far.

The High Cost Of Sarbanes-Oxley

Labels: cost of regulation, private equity, privatizing

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Tuesday, April 17, 2007

User's Guide to SEC Pay Disclosure Rules

As CFOs tussle this proxy season with the complexities of the Securities and Exchange Commissions new disclosure rules for executive pay, Moody's Investors Service is coming out with a user's guide to help shareholders benefit from the disclosures.

By calling for more information from companies, the SEC rules reveal "the way performance incentives influence management behavior and retention of top-level executive talent," said Mark Watson, managing director of the rating service's Corporate Governance Group and a co-author guide. "We believe compensation is a determinant of management behavior that indirectly affects credit quality."

User's Guide to SEC Pay Disclosure Rules

Labels: Executive Compensation, Moody's, sec

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Monday, April 16, 2007

SEC's key accounting guru working to streamline rules

For thousands of investors and executives at publicly traded companies, Conrad Hewitt may be one of the most important Washington civil servants they've never heard of.

The chief accounting guru at the Securities and Exchange Commission (SEC), Hewitt stands at the center of burning policy debates — from how far to cut back on corporate reforms imposed after the Enron debacle to which executives are to be punished for manipulating their companies' numbers.

Hewitt, 70, came to the job in August in the twilight of a long career as a California banking regulator and a partner at Ernst & Young, one of the nation's four largest accounting firms.

SEC's key accounting guru working to streamline rules

Labels: chief accountant, Hewitt, sarbanes oxley, sec, streamline

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Wanted: Money master, two days a week

When a small business calls on Allan Foerster or Steven Walker, it gets more with less.

Both men are chartered accountants, and both serve as temporary chief financial officers -- popularly known as "CFOs to go" -- for small businesses. They perform the duties of a full-time chief financial officer but on a limited or part-time schedule, working a few days a week for a small company.

Mr. Foerster, of Kitchener, Ont., has been a temporary chief financial officer for seven years and has his own one-man company, CFO 2 Go, Inc. He says increased scrutiny over governance and an emphasis on accounting responsibility, spurred in part by the Sarbanes-Oxley Act in the United States, has made it vital for even small businesses to have a chief financial officer.

But few small businesses can afford a full-time CFO, so hiring a temporary one is a more palatable option.

Wanted: Money master, two days a week

Labels: governance, small business, temporary CFO

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Gulf between US and international accounting standards remains

Companies from overseas that are listed in the US are still facing considerable differences between international and US accounting standards, Ernst & Young has stated.

The accounts of 130 foreign private issuers filed with SEC had more than 200 differences between the International Financial Reporting Standards (IFRS) and the US Generally Accepted Accounting Principles (GAAP), Accountancy Magazine reports.

Areas with the most substantial differences were pensions, business contributions and financial instruments.

Gulf between US and international accounting standards remains

Labels: GAAP, IFRS, sec

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'Dirty Data' is a Business Problem, Not an IT Problem

Over the next two years, more than 25 percent of critical data in Fortune 1000 companies will continue to be flawed, that is, the information will be inaccurate, incomplete or duplicated, according to research and advisory firm Gartner, Inc. Gartner expects that three-quarters of large enterprises will make little to no progress towards improving data quality until 2010. To gain competitive advantage from information, organisations need to identify ‘data stewards’ in the business and manage information as a corporate asset.

Speaking at the company’s inaugural Business Intelligence and Information Management Summit in Sydney this week, Gartner Research vice president Andreas Bitterer said that “dirty data” or poor data quality is an often-overlooked business issue and it can have a large negative impact on a business.

'Dirty Data' is a Business Problem, Not an IT Problem

Labels: Austrailia, European Basel Accords, Privacy Act, sarbanes oxley

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Deputy Chief Auditor to Leave PCAOB

The PCAOB announced that Laura J. Phillips, Deputy Chief Auditor, will leave the Board later this year. Phillips has been responsible for providing technical direction on the development of the Board’s standards, including ensuring that standards and guidance were communicated to auditors of public companies and other interested parties. Most recently, Phillips led the PCAOB’s efforts to facilitate implementation of the internal control reporting requirements of the Sarbanes-Oxley Act. Phillips has not yet accepted another position.

Deputy Chief Auditor to Leave PCAOB

Labels: deputy chief auditor, pcaob

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Sarbox changes welcomed but imitators abound

arewell, Hotel California. This week's decision by US regulators to make it easier for foreign companies to escape Sarbanes-Oxley when they delist from a US stock exchange will be welcomed by many companies that had complained the rules meant you could – in the words of the Eagles song – "check out any time you like, but you can never leave".

But is Sarbox all bad? The US has sustained a barrage of criticism for introducing a law, whose Section 404 provision on internal and auditor checks was seen as one of the most intrusive, and costly, measures ever foisted on corporate executives.

Sarbox changes welcomed but imitators abound

Labels: Austrailia, Brazil, Canada, EU, France, Hong Kong, internal control, Mexico, sec 404 sox

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Sunday, April 15, 2007

SOX and J-SOX Primer

On March 22^nd, Michael Dell the founder and CEO of Dell, Inc. at a Customer Reception in Tokyo, Japan remarked on the planned implementation of the so-called J-SOX laws in April of next year. He stated that "it's increasingly important for Japanese companies to review their database management and information security procedures to structure and comply with enhanced legal requirements for internal controls."

SOX and J-SOX Primer

Labels: governance, J-SOX, Japan

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Company buyout binge is most like a garage sale

We're getting into garage-sale season around here, which means that those who hold such events will, in addition to figuring out how to deal with those who show up at dawn's early light (two days early), also have to label very clearly what is and is not available for purchase.

The garage sale analogy is the best way to understand what's going on with the current buyout binge, one that if it hasn't already affected a company you work for or do business with, soon will.

That we're in the midst of a buyout binge isn't in itself terribly remarkable. Mergers and acquisitions are prone to cycles, and this happens to be the robust part of one.

Company buyout binge is most like a garage sale

Labels: acquisition, buyout, merger

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Thursday, April 05, 2007

SEC Tells Staff to Revise AS5

The Securities and Exchange Commission is sending its accounting staff to work with the Public Company Accounting Oversight Board on additional revisions to the auditing standard that has been criticized by public companies and legislators for creating costly audits of internal controls.

At a Wednesday SEC hearing, staff members of the Office of the Chief Accountant asked the commissioners for permission to work with the PCAOB to address several concerns that were raised during the current public comment period on the revised Auditing Standard No. 2 — which both regulators loosely refer to as AS5. Saying the staff will be "fine-tuning" AS5, the commissioners voted unanimously on all the staffers' requests.

SEC Tells Staff to Revise AS5

Labels: 404, as5, pcaob, sec, sox

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