The Evils of Sarbanes Oxley

It’s interesting to me that whenever the government imposes some new regulatory law, it tries to extend it to as many private individuals and businesses as possible -- yet always sees fit to exempt itself.

But to me, even if one were to accept the validity of preventive law (which I obviously don’t) this is completely backwards. For example, in the case of Sarbox, as a private investor I have, and have always had, the simple solution of not investing in a company if I’m unsure of its accounting practices or if I have any other doubts about them. No need for the government to assign independent auditors, as I’m not forced to give any private company or individual my hard-earned money. On the other hand, if I say: “I think the EPA has a history of poor budgeting and it seems to lack internal controls, so this year I’ll hold back that portion of my taxes which goes to fund them”, the government throws me in jail! Given that I’m forced to fund these agencies, it seems to me that it is much more important that they be policed by independent auditors and forced to jump through hoops to prove that they are using the public’s money properly, than it ever is to make private companies and individuals do it. Just a thought for our representatives in Washington….

Institute of Management Accountants Speaks Out About Impact of Sarbanes-Oxley on U.S. Industry
Quote:

"The Sarbanes-Oxley legislation was intended to protect the interests of shareholders and it has merit," Sharman said, "but now, three years later, the overly burdensome and complex requirements are impeding business performance. Companies have been forced to spend money -- more than $32 billion of what would have been shareholder income -- on costly procedures to satisfy regulatory requirements."

A few choice quotes from the article:

"Have you ever wondered what it would be like to spend a few years behind bars? Well, since the passage of the Sarbanes-Oxley Act in 2002, if you are a CEO, CFO or, and here's the rub, any other c-level executive (including CIO), it is much more likely you won't have to waste too much time wondering."

"Since its passage in 2002 and the subsequent establishment that summer of the President's Corporate Fraud Taskforce (which handles all cases of corporate fraud), more than 693 fraud convictions or guilty pleas have been secured in 577 separate cases involving 1,299 individuals."

I had good intentions of summarizing and then analyzing the Sarbox Act before actually posting other items here. But I've been so busy over at Thrutch, that I'm not sure when I'll have time to devote to this topic. As a compromise, I'll post news items here with little commentary, just to get them up.