Sarbanes-Oxley - How is it Affecting You?

Grant Barrett asks: "All I hear from IT directors is Sarbanes-Oxley, Sarbanes-Oxley, Sarbanes-Oxley. SOX, as they're calling it, is taxing manpower, swallowing time, and adding huge administrative headaches--not to mention incurring fees and salaries paid out to staff or third-party firms hired to ensure compliance--and that's just the IT department. How are you dealing? Did you make your compliance deadline even after the extension? Are you joining the the backlash?"

Comments

World's smallest violin

[Profane MuthaFucka]

OK, so the collapse of mega-corporations like Enron and Worldcom in accounting scandals cost the people of the country, particular investors, billions of dollars. Enron also defrauded California of billions of dollars.

MORE billions, in fact, than what the attacks on the World Trade Center cost us.

And now, they are saying that the burden of complying with a law that will help to prevent future abuses is too high? Boo Hoo.

I don't think it's too much to ask companies to prove they aren't ripping us off.

Re:World's smallest violin

[jbolden]

You can see from the above that I'm hugely in favor of this law. The World Trade Center bombing:

1) Killed thousands of highly productive people
2) Shut down a section of a major US city for days
3) Destroyed extremely expensive buildings which then required a very expensive clean up effort
4) Shut down a all foreign trade for days
5) Shut down a good chunk of the US transportation system for days
6) Resulted in large permanent increases in US airline ticket prices
7) Resulted in 2 wars
8) Resulted in an increase of oil prices from $20 barrel to about $40-50
9) May have increased cancer rates and other long term health costs for something on the order of 2 million people.

Depending on how you add this up you are talking $200b-600b in costs. I'd say Bin Ladin has Ebbers and Lay beat by about two orders of magnatide. I'd love to see Ebbers and Lay do 20 years and lose everything they own in fines. Bin Ladin is way beyond merely a criminal.

What is Sarbanes-Oxley?

[Anonymous Coward]

Would it have killed the poster to mention what Sarbanes-Oxley is?

Oh well, since he can't be arsed, here's a quote from the second link:

"The Sarbanes-Oxley Act is a sweeping piece of legislation that regulates, among other things, how companies report financial results and disclose executive compensation. What's more, the law holds both company executives and external auditors directly accountable for the accuracy of financial reports and seeks to protect employees who blow the whistle on suspected fraud."

One the best laws in a long time

[jbolden]

There have been few laws passed in the last 3 decades which are designed to help people (investors are often mutual funds and pension funds) at the expense of executive management. Executives for far too long have been able to lie and then claim they didn't know they were lying. Because the SEC doesn't go after white collar crime they way they go after some 16 year old who rips off a 7/11 these guys never go to jail. By creating a paper trail hopefully more executives who commit fraud will go to jail and there will be some decrease in the amount of fraud in US business.

If that's costs money I'm all for seeing the money spent.

SOX Sucks

[Anonymous Coward]

I'm posting this anonymously as I wouldn't want it traced back to me, but I can tell you not only is it costly and burdensome, but it doesn't work. We are now in "compliance", but the changes we had to make to our systems not only didn't have any affect on my ability to alter financial data, but they made them less secure in the process, because external auditors know nothing about our systems, they only have a checklist of features that have to be enabled. It's nothing more than a costly joke that wastes my time and keeps me from doing work that would actually improve our systems. I've started avoiding small, quick projects that would benefit the users, because I would spend 5 minutes making the changes and then 2 hours spread over several days documenting them and getting the required approvals to implement them.

fyi

[oliana]

Sarbanes-Oxley is a law that only applies to SEC firms (firms that are publicly traded in the US and must report financial statements to the SEC.)

Prevents Accounting firms from doing non-Audit functions for SEC firm that they also perform SEC Audits for (except tax-work, and only if approved by the SEC, and for work that produces minimal income to the Audit firm. These must be disclosed in the Financial Statements of the firm audited.) This is important becase an audit firm in the past could be doing as much or more work for a company in consulting as they were for in audit. The leads to an impression that the auditor might not be independant of the firm.

Increases the required independence of the Audit Committee of SEC Firms (Members of the Board of Directors who hire and oversee Independant Auditors). This is important because the Audit committee should not be biased towards the company if they are hiring the independant auditors and overseeing their work.

Makes Management of companies more responsible for the assertions they have in their Financial Statements (and assertion may be along the lines of "Currents Assets: $1.3 Billion" or "In the following year we expect to open three more locations in ..."). This is important because, if the CEO signs a statement that states that he knows financial statements are reported fairly and without any material misstatements, he cannot say in court that "I had no idea that this was happening."

Requires Management to asses the controls associated with preventing fraud, defalcation and errors that could lead to materially misstating their Financial Statements, and requires an independant Audit of this assesment. (This would be the part that affects the IT community the most.)

It also created a required record retention for audits, more thourough peer reviews of audits and rotations of the Audit Partners associated with the audit. (Thank you, Arthur Andersen)

How this affected me:
Many more jobs in the Audit field, mine being one. Which allows me to be a techy on the side, which is a lot more fun that it being work.