Thursday, August 2, 2007

Compliance with SOX just got easier

Laws passed in response to crises are almost always over-reaching and Sarbanes-Oxley is no exception (Economist article). Since the law was passed, foreign firms are less likely to list in US markets, small public US firms are much more likely to go private, and there has been a big increase in demand for auditors, e.g., Vanderbilt's new program.

However, with enough subsequent study, a flexible regulatory mechanism, and the short attention span of the US electorate, reform usually occurs. In this case, the SEC just announced changes in the auditing rules for implementing Sarbanes-Oxley, making it much less costly to comply, especially for smaller firms.

I want to hear stories about SOX compliance and opinions about whether it will get better. My accounting colleagues at Vanderbilt tell me that it "depends on the plaintiff's bar."

1 comment:

  1. I can confirm (not that it was in question) that the cost has been large and created opportunity for accounting firms. One CFO for whom we performed a SAS70 (just the technology side of SOX compliance)remarked to his board at their annual retreat, "We are now certain that SAS70 stands for Sell Accounting Services..."

    ReplyDelete