[Now how on earth did I move from Technorati rankings to Sarbanes-Oxley in one Saturday step? Easy when you know how. File Not Found to SOx via 404….]
The latest Economist, in an article entitled The Trial of Sarbanes-Oxley, reminded me of this document. It’s written by an economist and a law professor and well worth a read for those who are interested in such esoteric things. But then I’m told Einstein never wore SOx……
One paragraph in the Economist article stood out to me.
“Much of the blame for this should be pinned on accounting firms, which, despite being seen by the public as big offenders in the Enron and WorldCom scandals, have emerged as the big beneficiaries from SOX. According to Joe Grundfest, a former SEC commissioner, the audit industry has several incentives to “push Section 404 compliance to a point of socially inefficient hyper-vigilance”. To avoid further damage to their reputations, and to minimise the risk that they will be sued over accounting irregularities, audit firms are adopting the most prudent possible interpretations of the Section 404 rules — rules that are vague and open to argument. And, as Mr Grundfest points out, the “more onerous the requirements of Section 404, the more money the audit profession can earn” by selling its services.
Again, for those who are interested, please read Michael Power’s pamphlet The Risk Management of Everything, where he pretty much predicts the SOx debacle in style. Note to myself: must arrange to have lunch with Prof Power again soon.[An aside: I bought the pamphlet after reading a synopsis of his PD Leake lecture in 2004. Then, the only way to get the document was via Demos. Now Demos itself points you to Amazon, with no difference in price or conditions. Interesting]