Wednesday, August 10, 2005

Bruce Bartlett on Sarbanes Oxley

The above is a link to an article on the auditing changes called the Sarbanes-Oxley Act, which covers publicly traded companies since Worldcom, Enron, etc. This piece of legislation is putting a large costs on the economy for tangible benefits. While it is a boon to my profession, by employing thousands more accountants doing mundane work of little value added, it does not help private companies who also face the burden of increased auditing costs. Mid sized firms like the one I work for have benefited from it, as private big four firms, facing double digit increases in their fees due to increased liability costs, gravitate to us in order to seek some relief. Roberto Romano does a more detailed study on the Yale Law Journal on the matter, and we find out that this is costing business billions of dollars while adding little value to users of financial statement.

4 comments:

Jason Monteith said...

I have to be honest... I attended a presentation a couple of months ago where the topic was the Canadian version of Sarbanes-Oxley. Oh my goodness, was I ever bored out of my skull.

I'm sure it has good intentions and is important, but if it isn't providing the value to business and investors then one has to question why we should continue to spend the money to keep it up.

Mitch said...

Jason,

Think about it like the gun registry of accounting. No matter how expensive and how ineffective facts prove it to be, the government will press it forward because it 'sends the right message'.

BTW This is another reason why I stick to tax work and not auditing.

Jason Monteith said...

Mitch,

Whoa, SOX as the accounting equivalent of the gun registry?

Things are starting to come together now...

Mitch said...

Think about it,

When the next accounting scandal comes out - the powers that be will say that SOX is working fine in spite of the costs, that more needs to be done, and SOX sends the 'right message'.

Sound familiar??