Sarbanes Oxley: A Burden With No Benefit?

By April 9, 2006General

Here’s a link to a Wall Street Journal article from last week on Sarbanes-Oxley and its crushing cost of compliance, disproportionately falling on small businesses. It’s all buck and no bang, spending millions on compliance, millions that could be plowed back into investment. The article says that the SEC’s small business advisory committee has recommended exempting small businesses from compliance with section 404, the most onerous section, but the SEC doesn’t appear to be willing to make that leap.

Here’s an article from Inc. Magazine on the same topic. They lead with small company with a $3 million compliance bill. Says the article:

“What’s worse … is that complying with the internal controls rules didn’t do much to enhance the company’s systems or to protect shareholders. In fact, many of the issues seemed silly.”

Might be time to re-evaluate this law, birthed in yet another Congressional frenzy and over-reaction to the headlines du jour. In a quieter time, they should take a look, see what they’ve wrought and how much good it’s actually doing.

Join the discussion One Comment

  • Sarbanes Oxley:

    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.

    It has happened before. It can happen again and the trend of burdening actual producers with “one size fits all” regulations is accelerating not
    decelerating.

    Once Basel II takes hold in the U.S. adding to Sarbanes Oxley, the super control agenda of the “very best global elite” will be fulfilled and we can expect economies and civilization in general to deteriorate very rapidly.

    What’s the answer?

    Well, we (Competence Software), think it is financial literacy. 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 is 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.

    Our latest course – Sarbanes Oxley Simplified
    (www.sarbanesoxleysimplified.com) makes the
    actual Act understandable and fun to learn.

    Kind regards, Jessica Byrnes Competence Software Inc http://www.competencesoftware.net