Sarbanes-Oxley Nightmare Continues…
The Sarbanes-Oxley Act of 2002 is a futile attempt of Congress to legislate honesty. It is an overbearing response to the corporate failures of Enron, WorldCom, and others. It is forcing small cap companies to de-list from the stock market, and other private companies to rethink going public at all. When Microsoft went public in 1986, it was nowhere near the size it is today, and the same is true for up and coming companies that will boost the wealth of American investors. Should Sarbanes-Oxley prevent promising companies from going public, the wealth that company creates will not be shared with the public. This could prove the most damaging of all to the American public.
While Effective internal control structures do prevent fraud within the company, over regulating this aspect of public companies will prove more of a damper than a boost to the economy.
Lets hope the SEC rethinks the demands of Sarbanes-Oxley.
Links to Related Articles:
Fool.Com Article
Management Consultants Article
Accountancy Age Article
See also related Wiser Money article on December 28, 2004.
Comments are always welcomed and encouraged.
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posted by Maverick @ 8:07 PM
2 comments
2 Comments:
Consider also that the big frauds that brought about all this regulation were the brainchild of the Corporate executives, not the A/R clerk or the HR Manager. It would appear that the intense workload of the corporations and the auditors is misdirected. So long as management is able to override controls, it doesn't matter how well the A/P clerk follows protocol, management will still be able to doctor up some ingenious fraudulent scam. While SOX has good intentions, and better internal controls are definitely a positive thing, the cost of such arduous internal control documentation, testing, and auditing seems a bit overbearing and the benefits are still yet to be seen.
I agree with first comment. Perfectly put. Lets hope all of this turns out to be positive rather then negative.
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