Sarbanes-Oxley Costs Exceed Benefits 371
coondoggie writes "Two years of compliance with the Sarbanes-Oxley Act (SOX) have shored up corporate accounting practices - but with lopsided costs compared to benefits gained.
Bill Gradison, acting chairman of the Public Company Accounting Oversight Board (PCAOB), said that guidance the SEC issued last year and PCAOB's latest auditing standard may not be enough to clarify the rules that govern the reporting and auditing of internal controls. 'Based on the information we already have, it would seem that some further changes may be in order,' Gradison said."
Misleading summary (Score:2, Insightful)
Sarbanes-Oxley is a *very good thing* - it exists to prevent another Enron. It makes CEOs criminally liable for when their companies cook the books. Amazingly, for some inexplicable reason, they don't seem to like it. Everyone reading this should go over to Netflix and add Enron: The Smartest Guys in the Room [wikipedia.org] to their
Re:Misleading summary (Score:2)
Re:Misleading summary (Score:3, Insightful)
I'm not disagreeing, I
Re:Misleading summary (Score:3, Insightful)
No, it isn't. High prices encourage conservation and investigation of alternatives, which is exactly what's needed when demand exceeds supply.
Re:Misleading summary (Score:3, Interesting)
The big oil companies
Re:Misleading summary (Score:3, Insightful)
Re:Misleading summary (Score:3, Insightful)
But who is to do such a re-evaluation? The politicians? Heh. No, it's got to be you and me. And is there any hope in hell of pushing through such changes of underlying
Re:Misleading summary (Score:2)
No, it's not. Low pump prices encourage excessive usage (which has a whole bunch of negative direct and indirect flow-on effects, and very few positive ones) and discourage R&D into, and production of, alternative fuels.
(Incidentally, if you're American, you have no concept of what the words "high fuel prices" mean.)
Pers
Bzzzt. Wrong. (Score:5, Insightful)
First, realize that the majority of stock in the US isn't owned by rich individuals. It's owned mostly by mutual funds, which are in turn used as part of basically every retirement plan, investment account, college-savings plan, ad infinium. If you have a 401k, you probably are an indirect shareholder in Exxon-Mobil (and IBM, and Microsoft, and General Dynamics, and probably Halliburton). If any of the big oil companies were to sneeze, the whole economy would get a cold.
Second, high-priced petroleum products, especially gasoline, is not necessarily a Bad Thing. I think it sucks as much as the next guy -- if I could click my shoes together and go back to the days of 98-cent per gallon gas forever, I'd be doing it and buying a Camaro before you could say "carbon dioxide." As much as Ma and Pa Jones of Pig's Knuckle, AR think that they want the Gubbermint to step in and 'do something' about the high price of gas, they really don't. Because keeping the price of gas low will only ensure that it gets used up faster, and that we don't do a damn thing to change our usage patterns or wean outselves off of it before it runs out completely.
In other words, cheap gasoline just makes us, as a nation, press the accelerator to the floor as we're heading towards the brick wall of No More Petroleum. Paying the real market price for gas is the fairest way to wean everybody off of petroleum products: and people are listening. Go down to a Toyota garage sometime and see how many people are looking at hybrids, versus a year or two ago. The difference is pretty impressive.
The oil companies will continue to charge what they think the market will bear for gasoline and other products; when the cost of transportation fuels starts to become a major source of pain to American families, they will modify their usage patterns. This is how things have to work: people have to understand that the era of cheap gasoline -- probably of cheap fuel in general -- is over. In the future, if you want to drive 300 miles to see Grandma instead of call her, you're going to have to factor in the $30-40 in fuel that it's going to cost you. That's reality; that's life.
I have no doubt that many politicians this election year will try to come up with all sorts of creative ways of basically subsidizing or otherwise artificially deflating the price of gas. But as they're doing their financial rabbits-from-hats routine, I think it's worth it for everyone to remember that "cheaper gas" doesn't equal "more gas." In fact, it really means 'less gas' for everyone in the future.
Re:Misleading summary (Score:3, Informative)
we need more (Score:2)
Just imagine if the Microsoft anti-trust trial put all the execs in jail or worse. Actually, the mere threat of this would have prevented the problems in the first place.
Re:Misleading summary (Score:3, Insightful)
Re:Misleading summary (Score:2, Insightful)
No they aren't. It's not everybody who is saying that, just the people who look at it and think, "Fuck! How they hell am I supposed to fund that?"
The rest of us went from thinking "Jesus Fucking-a-Llama Christ! That cock sucking texan just evaporated 10 billion dollars and he's living in a fucking mansion and my pension just disappeared." to "Don't like the costs? Too bad. Maybe you should have called bullshit on your peers when th
Amen! (Score:2)
Exactly my feelings. The people who knew what Enron was doing, the regulators and accountants and banks involved, all knew it was skirting the legal edge, and was way over the moral edge. Yet their attitude was that of a kid watching a rodeo, it was all entertainment and none of their business. Now that society has taken steps to prevent more of it, they cry foul.
I think you are confused. (Score:3, Funny)
Re:Misleading summary (Score:5, Insightful)
Meanwhile, financial companies, especially hedge funds, are increasingly choosing to set up shop in London rather than New York/Connecticut to escape the burdens of Sarbanes-Oxley and SEC registration. Like them or not, these entities contribute a huge amount of money to local coffers: investors flock from all over the world to place capital in hedge funds, and they leave generally 2% of the investment and 20% of the profit annually with the fund managers.
No-one wants more catastrophes like Enron, but that doesn't mean we should throw the baby out with the bathwater.
Re:Misleading summary (Score:5, Informative)
http://blog.mises.org/archives/004345.asp [mises.org]
"In contrast, the CEO of Georgia Pacific explained that his company sold out to private Koch Industries in order to avoid mounting Sarbox costs."
and
"No doubt, a company that had poor controls may have improved them in order to comply with Sarbox. This does not mean that U.S. businesses in aggregate benefited from Sarbox. A law mandating a 45% increase in marketing spending might help some companies too, but it would cripple most others. Even companies with superior internal controls were forced by this perverse law to spend more money on internal controls."
Business is only a small corner of society (Score:2)
But it also doesn't mean that society as a whole did NOT benefit from roping in bad business practices.
Businesses aren't the sum total of society. They are a small part. If businesses suffer but society gains, who says that is a bad thing? Concentrating soley on the business part of the equation is misleading.
Re:Business is not only a small corner of society (Score:4, Insightful)
Most of my interactions with other people, from a subscription to the YMCA to where I stop for cigarettes to the people I work with to the decision to mow my own lawn or hire a gardener, are business related.
The moment I step out of my door, which I bought, the actual number of people I deal with on a purely social level as opposed to the number of farmers, butchers, bakers, candlestick makers that I deal with on a business basis is very close to vanishingly small.
What reason do I have to be able to type to you this message but the ISP who doesn't know me on a social level at all, the Tier1 IP provider that doesn't know I exist at all, the Slashdot administrators trying to make a living by advertisements for which I am merely one few bytes of data in their database?
If it weren't for business, the price of tea in China would be irrelevant. But the fact is that by means of business, the price of tea in China is directly related to the price I see on the box of Oolong on my grocers shelf (who otherwise would have no interaction with me what so ever).
I think you need to look up the word "praxeology".
Bob-
Re:Misleading summary (Score:2, Interesting)
Ageed. My company kept track of how much time was being spent on SarbOx compliance. From the st
Re:Misleading summary (Score:2)
Exactly. Sorry you had to post as an anon, that comment was a real one and deserves respect.
Re:Misleading summary (Score:3, Insightful)
Re:Misleading summary (Score:3, Insightful)
Naive maybe. Dumb? Do you understand what that word actually means?
"Completely free markets don't work."
Yes, they do, and more efficiently than regulated ones. If regulation solved problems, there would be no pollution, no corruption, no scandals.
If I promised that hitting yourself in the head with a hammer would feel better than not, and you hit yourself and discovered I was wrong, you would not hit yourself in the head again. Government has promised to solve problems with regulat
Re:Misleading summary (Score:3, Informative)
There goes any shred of credibility you've been clinging to. Zero-Sum games are but one branch of games studied by Game Theory.
Bring back Glass-Steagall (Score:5, Informative)
Re:Bring back Glass-Steagall (Score:3, Insightful)
Re:Misleading summary (Score:5, Insightful)
Using your same logic, here in the US we should also repeal child labor laws, environmental regulation, and occupational safety laws, merely because many US companies will open shop in in other countries where there are looser pollution regulation, safety laws, etc. Think of how much business the US economy is missing out on due to these regulations pushed by 'liberals'.
The scary thing is that a typical pro-big-business Republican would agree wholeheartedly with my paragraph, without sensing its sarcasm.
Re:Misleading summary (Score:3, Interesting)
Re:Misleading summary (Score:2)
When you write stuff like this, could you please also name the neocon website you're parroting it from? Your argument sounds a lot like the estate-tax debate, the rich defending thei
Re:Misleading summary (Score:3, Funny)
This is Slashdot, please return to using hyperbole, straw man arguments and ad hominem attacks.
Re:Misleading summary (Score:3, Interesting)
The enormous amount of regulations coming with Sox are chilling, and it simply is out of proportion for the damage small and midcap companies c
It also costs *us* (Score:4, Interesting)
Previously, if I had a program I wanted to release for profit, I would do the core features well, and add modules on around the side later, at extra cost. I might release interim patches for any bugs found in the field, and as a sweetener, upgrade some small functionality to get users affected by the bug back on "my side".
Now, I can't do that. The only time I can have a free interim release is to fix bugs - no new features are allowed. I'm no lawyer, but this is (expensive) legal opinion. So the dynamic changes - in order for me to have the most flexible release policy, I'm *far* better off releasing bug-ridden software that does *everything* - even if it only does it badly. Following this path, I get a choice of how to proceed later (I can add functionality *by* fixing "bugs" (ahem) by actually making a serious attempt to provide the functionality I promised in the first place). I can gauge the market and give it away free if that suits my needs at the time.
Now there's a downside to releasing bug-ridden software (and we're all aware of the arguments). The problem with this (responsible) attitude is that the collective consciousness of consumers today seems to not have a problem with buggy software - software crashes all the time, they're used to it, and it's a self-propogating meme of "what is normal". Responsibility don't pay.
So, when I release software (under the usual constraints of "good,cheap,fast - pick any two") I'm being pushed in the direction of "cheap and fast" because there's no real downside to me, and I get a lot more flexibility with dealing with the resulting debacle. I can balance my budget better ("cheap") and I get to market faster ("fast"). The fact that it doesn't work so well isn't really an issue.
That's what Sarbanes-Oxley has done for us.
For the record, I don't release software - please direct hate-mail to
Simon
Comment removed (Score:5, Insightful)
Re:Misleading summary (Score:2)
Wrong (Score:2)
Don't forget the banks and accountants and regulators who gave a wink, wink here and a nudge, nudge there. It wasn't just one bad company, it was an antire corrupt business climate which thought the Enron cowboys were doing a great job, thought it was pretty damn hilarious how they gamed the stupid California regulators and wreaked such havoc in the economy.
Re:Misleading summary (Score:3, Interesting)
Re:Misleading summary (Score:5, Interesting)
I spend the rest of the time (15 to 20 hours per project) filling out several forms that I didn't used to have to fill out, doing self-audits to confirm I filled out the forms, waiting for approval of my forms before I can go to the next step, etc.
Meanwhile- the execs in my company can write a $20,000 check without even a counter-signature from another exec and much larger checks with a counter-sig from *one* other exec with NO required paperwork of any kind and they get paid literally millions of dollars while our stock has declined constantly in price for years.
Why the heck sox means the "Massive Paperwork for Programmers" is beyond me.
And then when we have a high priority project that a big executive wants fast-- we toss all the paper work out the window and backfill it afterwards (even putting links to empty documents that will be filled in later).
Yea right- sox is a very good thing-- NOT. We already had laws against fraud. All we have to do is start ENFORCING them.
Re:Misleading summary (Score:5, Insightful)
While slashdotters may derive a justified modicum of rightously deserved glee in this state of affairs - who here hasn't been given like orders - the economic waste on the national scale is so hideous that it needs airing. Never before has so much money been wasted on useless butt-plate.
The concept here is that corporate processes need to be audited independently to prevent fraud and malfeasance. Wonderful idea. What the SEC people had no clue about, however, was just how many processes there are churning away every day in a normal company. There are thousands! If you want to monitor the pain Sarbox is inflicting, subscribe to the alerts from CFO.com. For example, one company just found out it would have to pay its auditors - that's right, the people who failed to catch Enron's malfeaseance - $50,000 a year just to audit its employees vacations. That's not so much alone, but when you multiply it by everything going on in a company, the costs are absolutely humongous. And all of this money is going to the people who not only failed to prevent Enron but told them how to do it. Something is seriously wrong here.
Proportionately, the costs for smaller businesses are much higher (typically 20x). This has an anti-technology bias that hurts all of us in technology and eventually the whole economy. Because our start-ups are small and Sarbox denies us capital, we will not be able to hire and develop. This is bad Kool-Aid.
The supporters of Sarbox are: a) Big Labor - they are more successful unionizing big/old companies, fail miserably with high-tech startups, hate us, and actively seek to ruin us, b) Auditors - they make the money from this regulation, c) Regulators - from their perspective, regulation is always good and Sarbox means hiring many more of them.
The losers are everyone else, especially us in the tecnhology sector. I'm developing technology that could make corporate treasuries more efficient by increasing their control of liquid assets. I cannot sell it because of Sarbox and all its distractions. Ironically, corporate treasuries are so involved in dealing with the worthless regulatory minutia of Sarbox that they cannot invest the time to evaluate systems that would actually improve their control of corporate liquid assets.
I wish I could conclude this rant by recommending what we should do, but I am not as politically astute as our foes. All I can say is let's hope for the best and maybe someone out there in the political world will get a clue.
Re:Misleading summary (Score:3, Insightful)
Re:Misleading summary (Score:3, Informative)
Some of the SOX stuff is reasonable - although most large companies are already doing that. But some of the other parts are more or less insane. Like the infamous section 404 - everytim
Re:Misleading summary (Score:3, Insightful)
The executives of Enron broke the law. Let me repeat, in case you didn't hear: the executives of Enron broke the law. As a law abiding citizen, who naturally obeys the law just because it is there, that's undoubtedly an alien concept. It certainly is to me. So I will say it again. The executives of Enron broke the law.
Criminals do not obey the law. Sarbanes-Oxley won't prevent another Enron. It's just another law that criminals will ignore but which will punish the law-abid
Re:Misleading summary (Score:2)
With SOX prevent any future finincial scandals? No, certainly not. Will it limit the amount of damage
Re:Misleading summary (Score:3, Insightful)
Large companies have the economy of scale to spend money and do a proper SOX implementation. For smaller companies, this is simply cost prohibitive. One company I worked at briefly left me sitting around for probably 30-40% of my day because there was no work "authorized" for me to do. I would go almost every day to my boss and ask for something to do and he would tell me straight up
SOX would NOT have prevented Enron (Score:2)
Enron was about fraud by management. Fraud will find a way to trump any set of rules to the contrary -- except maybe moral and ethical, but those are pretty hard to quantify.
Will SOX make it harder for another Enron to occur? Yeah, maybe. Will it prevent large scale corporate collapses from fraud? Not a chance. There will al
Re:Misleading summary (Score:2)
As far as consultancy, they shouldn't be doing it! It was illegal until the 1999 repeal of the Glass-Steagall Act. The merger of finicial institutions created the conflicts of intersts that led directly to Enron.
Re:Misleading summary (Score:2)
Grandparent: Companies do not have to change auditors (meaning audit firms) every few years. That's the last thing they want to do. Assuming the auditing firm is independent (and MANY heavy regs govern that), they only benefit from the knowle
Re:Misleading summary (Score:2)
Re:Misleading summary (Score:2)
Re:Misleading summary (Score:2)
Too bad for them. (Score:3, Insightful)
Too bad it only takes a few bad apples to ruin it for everyone.
Re:Too bad for them. (Score:3)
Sarbanes-Oxley is like shooting a machine gun into a crowd because one person there robbed a bank. But then any shit gets modded up on this site.
Of course they're going to say that... (Score:2)
The Heavy Hand of Sarbanes-Oxley (Score:2, Insightful)
Re:The Heavy Hand of Sarbanes-Oxley (Score:3, Insightful)
Note the emphasis. Most posts are just saying 'companies'. Kudos to you for saying _public_. If you want to get the windfall of an IPO, if you want to have stock in your company traded on an American exchange, you submit to the relevant regulations. It's not like there haven't been any cases of unchecked corporate malfeasance screwing over the small investor, have there? So, the costs are passed on through stock dividends (or less dire
Re:The Heavy Hand of Sarbanes-Oxley (Score:2)
SOX auditors have picked waaaaaay too many nits. Partially this is because of ambiguous (or non-existent) guidance from the PCAOB. Partially it is execs being IT ignoramuses who believe Big 4 FUD. Partially it is seasoned IT folks and internal audit departments lacking a common language, not trusting each other, etc.
Re:The Heavy Hand of Sarbanes-Oxley (Score:2)
My neighbor, for example, has a small, public business with 3 full-time employees. He runs a print shop.
Re:The Heavy Hand of Sarbanes-Oxley (Score:2)
Not surprising. (Score:3, Insightful)
But the real issue is that proper external financial reports aren't for the business (though they do help it, as long as the business pays attention to what they say.) They're for external users. And I can tell you right now that while banks who are looking to loan money, analysts who are grading performance, and investors who are looking to invest in a company's stock or bonds wouldn't mind seeing any costs cut, they don't think that the benefits are outweighed by the costs. They'll take the best information they can get, no matter what has to be done (within some modicum of reason.) And that's the point of Sarbanes-Oxley.
In 2004, GE spent about $33 million on Section 404 compliance, and costs ran about the same in 2005, Ameen said.
According to a quick perusal of GE's 2004 10-K, they had $20 billion in pre-tax income. I don't think $33 million is remotely too much to insure that that 10-K is correct.
Re:Not surprising. (Score:2)
According to a quick perusal of GE's 2004 10-K, they had $20 billion in pre-tax income. I don't think $33 million is remotely too much to insure that that 10-K is correct.
That turns out to be 0.16% of the total income. Not bad, though expenses generally tend to add up, I don't know what compliance to other regulations cost. I imagine GE can forgo a the operation of couple of their executive jets
Re:Not surprising. (Score:2)
Expenses do add up, but this is one of the most necessary expenses around. If you can't trust the 10-K, what the hell good is it?
Compliance (to accounting standards) generally involves a bit of staffing and their accoutrements (PC, office space, etc.), but it isn't typically more than that. Sarbanes-Oxley is more expensive than most to comply with, because it involves fairly detailed examinatio
UNIX Audit Tools (Score:5, Interesting)
Very unpopular sentiment (Score:5, Interesting)
Crooks don't comply, because they're crooks.
Customers, that's us, end up with higher prices for the things we buy, and higher taxes to pay for all the new auditors.
Martha Stewart goes to jail while the real criminals get away with what they've always gotten away with.
Politicians get reelected for having "done something".
To quote from the movie Spartacus, "I'll take a little republican [style of government, not party] corruption, along with republican freedom!"
Want to really put the screws to "corporate executive" crime? Then eliminate the government granted limited liability that a "corporation" represents. Allow thereby the officers of a company to be directly liable for their decisions, their accounting practices, their performance.
It's easy to follow the Big Lies handed down by the sensationalist press that don't want you looking at their own corporations and unions. S-O doesn't solve anything. It merely adds another layer of bureaucracy to the effort of getting anything accomplished.
Bob-
Re:Very unpopular sentiment (Score:2)
So if you get sick from a hamburger, fine, you get your money back, but thats all, not 40 million dollars. Otherwise, corporate limited liability MUST stay.
I'm ok with responsibility and fairness, provided it goes BOTH ways. Otherwise, we might as well just shutdown any reasonably sized bus
Re:Very unpopular sentiment (Score:5, Insightful)
So if you get sick from a hamburger, fine, you get your money back, but thats all, not 40 million dollars. Otherwise, corporate limited liability MUST stay.
That is the stupidest, most unjust thing I've seen today.
The idea of tort law is to make the victims of a tort whole, and to discourage tortfeasors and other potential tortfeasors from harming anyone else similarly.
If you get sick from a hamburger, then yes, I suppose you'd have a warranty claim for the burger having been defective, in which case the appropriate remedy would be the price of the burger.
But that's totally beside the point that the burger made you sick, causing you to rack up medical bills, lose income because you can't work, caused you pain and suffering, etc. To even suggest that the price of the burger would be just compensation for what could be quite significant injuries, is simply cruel of you.
In any event, limited liability merely refers to the liability of investors (who cannot lose more money than they invested -- i.e. if you buy $50 of stock in WidgetCo, and they go out of business, you only lose that $50) and that's it. The corporation itself is not shielded from liability, nor should it be. And its officers and management, in their capacities as such, are not particularly shielded either, though their concerns are less about tort liability and more about liability to the investors, to whom they owe a duty.
Re:Very unpopular sentiment (Score:3, Insightful)
However, I don't necessarily think that eliminating the corporate form is bad. I think it runs counter to a true free market (because corporations by design work to restrict real information about the marketplace). Combined together, I think that the Corporate Form and the increasingly unregulated markets (notice I didn't say "Free") that we have will eventually en
Re:Very unpopular sentiment (Score:2)
The supposed goal of Sarbox (great name) would be achieved by market forces.
I also expect that, since where there is hazard there is profit, insurance companies would come up with a way to create "shareholder insurance". Interesting thought that.
Bob-
Re:Very unpopular sentiment (Score:2)
Geez, bud, put down the Ludwig von Mises website for a minute, and do some research for a minute, to wit: http://www.s-ox.com/Feature/detail.cfm?articleID=1 743 [s-ox.com]
Re:Very unpopular sentiment (Score:2)
No, I'm a bitter anarchist who watches as everything government touches turns to poop, which poop is then used by government to justify more intervention, which then turns to poop, which poop is then used...... etc etc etc.
If you try something and it doesn't work, stop trying it. Everybody recognizes the simple logic of not hitting ones self in the head a second time, but somehow governmen
Mod Parent Up! (Score:2)
Or the Hand Loom manufacturers! Entire industries put out of business by the WalMarts of their day.
Re:Mod Parent Up! (Score:2)
Well, good sir, I think you need to go back and change your wording. The other person and I both received the same impression by your post, that the Mom and Pop were going out of business because WalMart moved in next door and undercut their prices.
I have gone back and read it and it seems you used very clear and unambiguous language to mean something other than what you say now you meant to say.
Bob-
Re:Just for comparison (Score:2)
And you're wrong. I suggest that your "anyone with any idea" is the assumption that needs to be addressed.
Your posting was not addressed only to learned economists and business majors. If you meant "forced into poverty by resulting lawsuits" instead of "forced into poverty by a lack of sales", it is my opinion that you should have said so explicitly.
Indeed I am a free-market advoca
Re:Just for comparison (Score:2)
Unfortunately, that is an obvious reasoning of the posting which brought up the subject you are complaining about:
"So mom & pop running their little grocery on the corner should be forced into poverty because Wal-mart moved in next door and took all their customers away?"
"[F]orced into poverty" by lawsuits, as opposed to "[F]orced into poverty" because of a lack of sales was not specified.
Scream all you want, the fact remains that Sarbanes-Oxley is
Re:Very unpopular sentiment (Score:2)
I'm also curious about the elimination of the limit to liability of investors. Regardless of endangering the business model called "stock exchange", what if investors had to actu
'Please don't regulate me' (Score:3, Insightful)
Uhhh, so who is networkworld.com, why should I believe what the regulated have to say to the regulators, and why did the article summary assert what they stated to congress as certain truth?
SOX as Damage (Score:4, Insightful)
However well-intentioned SOX is/was, if this trend continues, we don't get the SOX purported benefits, and we lose the economic benefits of these companies on US soil.
Re:SOX as Damage (Score:3, Insightful)
Re:SOX as Damage (Score:2)
Re:SOX as Damage (Score:2)
Re:SOX as Damage (Score:2)
Working in an accounting environment, I see firsthand the enormous amount spent on Sox compliance. The OP's example only proves my assertion that the slimes that run the game will find new and novel ways to get their hands in the till.
The Ken Lays of the world didn't get the big bucks from playing by the rules.
Follow the money (Score:2)
Costs to who? (Score:2, Flamebait)
1) The company went under, costing investors billions.
2) Some of the investors were people working for retirement, count up the cost of medicare and other public support they will need.
3) The manipulation of the elect. market caused a number of bad side effects including lower competitiveness of businesses in the affected areas (e.g. California).
4) Some business, I have no doubt, went out of business due to increased costs. Good ideas may have been lost, peop
But... (Score:2)
The Biggest Problem With SOX (Score:2, Insightful)
Let shareholders judge the value (Score:2, Insightful)
GE's Market Cap: $365 billion
Percentage of Capital spent to make sure they're honest:
As a GE stockholder, I'm happy with that. I will always be willing to pay
Re:Let shareholders judge the value (Score:2, Insightful)
404 (Score:4, Funny)
Duh, I could have told them that. (Score:3, Insightful)
boondoggle (Score:2, Informative)
Exec Talk Is Cheap (Score:2)
Re:Exec Talk Is Cheap (Score:2)
Re:Exec Talk Is Cheap (Score:2)
Hmmmm...... (Score:2)
Please....would someone in Washington think of the corporations' bottom line for once??!!!
As usual, it's the "experts" who make the money. (Score:2, Insightful)
Industry quibblers brought it on themselves (Score:3, Insightful)
But you know what? There are a zillion things any of us could do every day that are legal but immoral. Enron had no morals. They may have had great legal advice on how to skirt the edge, but their own admissions in email and memo, show they knew it was immoral. When the wholesale price of electricity jumps from 3 sents to 300 cents and stays there for exactly one hour before falling back down, something is wrong, whether legal or not.
Just as I have no respect for cops who complain about getting no respect when they won't turn in corrupt fellow cops, I shed no tears for business people who can't keep their own chicken coop clean.
This is the price you pay. You fuck with the public long enough, the public will fuck you back. Hell yes, it may be bad for business, but what they were doing was worse for society. So lump it, business boys and girls. You clean up your act, police yourselves, and earn the repeal or reform of SOX. Until then, I rejoice in what it does. Society is better off with the scoundrels roped in. Even if that small section of soceity call business is suffering a bit, society as a whole is better off.
Main problem... (Score:4, Interesting)
I've had a lot of managers say we have to do such and such for SOX compliance. When I inquire as to more detail... Like what exactly, so I can make sure the solution fits within the requirements. I get blank stares.
That's a large part of the cost. The law itself is not a bad idea. It's just nobody knows how to comply.
SOX Never Ends (Score:2, Interesting)
Having dealt with SOX compliance... (Score:3, Interesting)
As a developer, certain procedures and responsibilities have always rested on my shoulders. I'm used to it, and I rely on them to help me do a better job. However, with the advent of SOX compliance, so many layers of crap are added to my workflow that I end up spending 4 hours documenting a 20-second fix to correct a spelling error in a piece of code.
If these new procedures were to give me any sort of confidence that my fix not only addressed the problem, but didn't cause any new ones, then I would be more open to accept them as part of my job. As it stands, though, it only extends the amount of time that potentially Bad Stuff(TM) takes to make it into production.
Even with supposedly airtight SOX-compliant controls in place, any developer at my company can easily mangle production environments at any time. Here's why: one of the big things they started off with when implementing SOX controls was that if you were a developer, you shouldn't have direct access to production systems. So, they add a few layers in there. You, the developer, can't touch production, but you can write a script and give it to someone in a "responsible position", who can then run it in production. Problem is, the person who's supposedly responsible for the system often times has no clue what the script does -- even if they actually bothered to look at the script in the first place. They may ask you what it does, simply because they need to appear to be doing their job, but does it really matter what the answer is? They blindly run the script and send you the output. They don't know what the script does, so they don't know whether the output is valid. You tell them everything looks good. Everyone's happy.
Doesn't matter whether you update a single row, or drop a table with 70 million rows -- no one involved in the process is going to actually take the time to look at what you're doing in order to determine that it does what you say it does. As long as you've convinced people you know what you're doing, you have free reign. The addition of SOX hasn't changed this. The only benefit (if you wanna call it that) I can see is that now, you've got a pile of documentation showing that 4 people assisted you in wiping out data that will take days to retrieve from tape. The only way that controls are worthwhile is if they truly prevent this sort of thing.
*sigh* (Score:4, Interesting)
1) For those who are claiming that the implementation/specific requirements are too strict, could you give an example? I have had to do things required for SOX compliance (and I know of plenty of other things that my company, and others, have done), and I have to say, I have yet to see anything that I consider overly burdensome. And certainly not so overly burdensome that they outweigh the benefits of the intended effect of SOX: ensuring more accurate and honest reporting in filings by public companies, and ensuring that management is held responsible for what is in those filings.
2) For those who are claiming that the original intent of SOX is wrong, could you please explain why you think so in those parameters? There are certainly downsides to SOX, but a million posts saying "SOX sucks" or "I have to do a whole bunch of extra things so that my company is SOX compliant" doesn't mean anything. First, obviously it doesn't provide any kind of example. Second, there's no reasoned logic as to why these downsides are worse than the upsides. Which leads me to...
3) For those who are claiming that the original intent was good, but the implementation is faulty, again, could you provide examples? Personally, I feel that extra work for you (or your accounting department, or whoever) is worth it if it helps to ensure that 10-Ks and the like are as accurate as possible. There is certainly a point at which the expense to make them more accurate outweighs the benefit of that improved accuracy. But remember, as I pointed out upthread, these filings are not FOR the company, or even really FOR the government (nearly every company has two sets of books, one for tax purposes and one for annual reports); they're for you, me, and every other person (and institutional investors) trying to decide whether investing in that company, be it through stocks, bonds, or any other avenue, is a good investment. The purpose of these filings and the role of the government in ensuring the accuracy of those filings is to make sure that investors have as much (and as accurate) information as possible. This is a good thing. If you'd like to argue that it's not, I (and probably others) will be happy to do so. If you're simply trying to point out that SOX doesn't fulfill its intent, then please, please say WHY you think that, and please give some thought to how much more work you would be willing to put up with, and how much expense you think is acceptable for a company to incur, to help the markets get better information.
4) Finally, there is a very interesting argument against SOX that is getting ignored upthread. SOX is definitely a regressive expense. Small businesses are paying a higher percentage of their revenue (or pre-tax income, if you want to be pedantic) than larger companies. Is this fair? What, if anything, can be done to alleviate that problem? What slope of regression (I'm probably butchering this terminology-wise, but I think you know what I mean) is acceptable to you, assuming you believe that SOX is otherwise a net benefit?
On the whole, obviously I am in favor of SOX. I wholeheartedly agree with the thought process behind it, and in my experiences dealing with it, I haven't found anything to change my mind. If you disagree, let's talk about it. This is a very, very important issue. But let's talk about it rationally and logically. Throwing out "it sucks", "I hate SOX", and "It doesn't work" don't do anything to further the discussion.
And yes, I am a longtime Slashdot reader, and I know that it's sometimes hard to find real, thought-out discussion. But we can certainly try for it.
Mod up. (Score:2)
Re:Don't like the law? (Score:3, Insightful)
I think you're not being honest here. You should replace "bribing a new set of lawmakers" with "bribing the other corrupt party".