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Fixing holes in SOX

Filed in archive SOX by leon on October 02, 2006

Fixing holes in SOX
So change is ahead. The question is whether it will be real change, or just a band-aid.

Michael Oxley, the SOX co-author, has come out saying that he expects some changes next year in the way that Sarbanes-Oxley will be enforced, according to news reports.

Oxley is trying to have it both ways. First he defends the law ("We did a good job, all things considered") but then admits it's having a severe impact on small companies.

But that's what you get when you rush through a law without any Properlinks cost-benefit analysis which is absolutely necessary when you are introducing changes as sweeping as the ones under Sarbanes-Oxley.

A rigorous cost-benefit analysis would have identified the problems that subsequently emerged.

But how effective will the changes be?

Less than two weeks ago, Securities and Exchange Commission chairman Christopher Cox told a congressional committee that the act's internal controls provisions had been costlier than expected but that there were no irreparable problems.

Contrast that with the about-face by his predecessor Alan Greenspan who says the only way forward is to scrap the whole thing and start again.

Perhaps a sign of what might lie ahead is the move by the Public Company Accounting Oversight Board to simplify Auditing Standard 2 which, if implemented successfully, could simplify and streamline the internal control provisions of Section 404. The regulators would expect this to make Section 404 more cost-efficient for smaller companies by reducing the time and money spent on audits.

The Greenspan solution is unlikely to get up.





Permalink: Fixing holes in SOX
Tags: Michael  Oxley  SarbanesOxley  oxley  sarbanes  business  sarbanes+oxley  fixing+holes  michael+oxley 

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