Belmont University

Sarbanes-Oxley Update

From National Dialogue on Entrepreneurship:

Last week, a new report was released by the Committee on Capital Markets Regulation, a private group of 22 prominent business leaders and economists, that recommends Section 404 of Sarbanes-Oxley (which requires extensive auditing of internal controls) be relaxed, especially for smaller firms. The report calls for a complete overhaul of how the Securities and Exchange Commission and other agencies regulate capital markets. Instead of focusing on enforcing specific rules, the SEC and other regulators should focus their work on general principles. The difference between "rules" and "principles" is often in the eyes of the beholder. So, expect lots of debate on this report's findings in the coming months.

My fear is any attempt to "simplify" will only make things more complex. Remember, the same major accounting firms that created the mess to begin with, then helped write Sarbanes-Oxley through their proxies on K Street in Washington, and now will likely be involved in shaping any reform. Any changes will require countless billable hours to interpret, no doubt.


Posted by Jeff Cornwall on December 7, 2006 09:58 AM |

Comments

What about the fact that the majority of IPOs this year were issued abroad due to ability of firms to raise capital by seeking regulatory arbitrage in lesser regulated environments? I see your point on multiple interpretations of various 'principles' rather than specific rules, however, what costs will come of a more stringent accounting system. Paths will be found to evade specific rules however principles can be applied to a variety of situations. I feel as though it is much more efficient to deal with issues that have a dramatic effect on investors and other stakeholders rather than attacking those who violate rules that might not necessarily be unethical in every situation.

Birdied by: Cory | December 7, 2006 10:37 PM

Sarbanes Oxley and acts like it are purposely designed to tighten control
over free enterprise which makes enterprise, of course, less free. Sooner or later
the entrepreneurs who fuel the economic engine get tired of funding
parasitic government bureaucrats and rapacious "global elite" banking interests.
They quit working and that is the end of an economy and the civilization.
The trend of burdening actual producers with "one size fits all" regulations is accelerating not decelerating.

What's the answer?

How many people engaged in business really understand an Income Statement? A Balance Sheet? A Cash Flow Statement? Every one engaged in business should understand
these financial reports and their personal responsibility to ensure reporting
accuracy. But the % of individuals engaged in business that truly understand
financial reporting is probably very small. And so they make mistakes
or are open to fraud perpetrated by ethics deficient "experts".

The market crashes, the public is shorn and their savings harvested.

Some politicians rise up on their hind legs, wring their hands and
pass legislation to "protect the public". The law gets applied
to everyone whether they had an ethics problem or not. Usually,
the fox in placed in charge of the chicken coop as was the case
with Joe Kennedy being made the first SEC chairman by Roosevelt
after Kennedy made a fortune short selling before the created crash
of 1929.

The "global elite" pay their 100 million or so in fines
negotiated by their global elite attorneys and then carry on
business as usual working their fines and cost of compliance
into their numbers.

The true entrepreneur gets squashed further.

The only way the "global elite" get away with this racket is
to make the subject of finance so complex that us ordinary beings
can't confront it.

The answer is to simplify the subject matter so a critical
mass of businessmen will truly understand the language
of finance and its rules, will see how they are getting ripped
off by parasitic elements and will "throw the rascals out".


Our latest course - Sarbanes Oxley Simplified makes the
act understandable and fun to learn.

Maybe enough people will spot the super control agenda
behind acts like Sarbanes Oxley and Basel II and take back
ownership of their countries and economies from the parasites.

Birdied by: Jessica Byrnes | December 10, 2006 04:29 PM

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