by Mike Masnick

Repeal The Sarbanes-Oxley Tax Now!

from the sounds-reasonable dept

Many people agree that the Sarbanes-Oxley Act was simply an overreaction to all the corporate scandals from the last year, and that it's unlikely to do much to stop thieving, scamming execs. However, there is very real cost for companies to comply with the Sarbanes-Oxley Act, and it's hitting smaller companies especially hard. The article talks about how it's costing Borland an additional $3 million, at a time when that money could clearly be better spent. At the same time, it's creating a "cover your ass culture", according to the CEO of Tibco. Instead of responding to customer demand, they're now spending all their time looking at the possible impact of any move in accordance to the new Act. I agree that executives need to be held more responsible, but it seems that a law like this probably should have been passed after some more careful thought and discussion, instead of immediately following the exposure of some of the excesses. As it stands now, Sarbanes-Oxley seems likely to hinder many businesses without doing much to stop criminal behavior. As such, it doesn't seem particularly useful.

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  • identicon
    Doug, 17 Dec 2002 @ 8:34am


    Oh cry me a river.

    These guys are just upset that now they actually have to learn what the heck is going on in their companies, and even worse, take some responsibility for it.

    They seem to think that CEO is "Chief Marketing Officer". Look at the quote from Tibco's CEO: "you're supposed to be all about the customer". Wrong. That's not the CEO's job. The CEO's job is to be all about the company. The whole point of Sarbanes-Oxley was to assure that the CEO is looking out for the investors' interests.

    The companies that are incurring serious costs to comply are the ones that were out of control in the first place, and the CEOs who are complaining the loudest are the ones who don't know how to run a company.

    reply to this | link to this | view in chronology ]

  • identicon
    Steve, 17 Dec 2002 @ 9:40am

    No Subject Given

    "All these charges take away from shareholders, and they do not help me become more transparent or grow the business."
    Dale Fuller, CEO of Borland.

    How does protecting shareholders from fraud take anything away from them? And I think he's missing the point--as far as I'm concerned, one of the main goals of the at was exactly to make CEO's less transparent. They get paid millions to run a company, and in the past, when they did illegal things, they weren't really accountable. The additional costs are in most cases optional, not required. Now that CEOs know they can face real jail time for breaking the law, they will tread more lightly. They'll pay for a lot more consultants to help make sure they're not breaking the law--but the truth is it's mostly just them purchasing a conscience.

    Don't speed and you don't need to fork over the cash for a radar detector.

    The whole thing just feels a lot like gambling in baseball. The reason it's such a touchy issue is because if some one bets on their team (especially against) the entire integrity of the game is hurt because at the most fundamental level, it has to be about playing to win or everything else falls apart. Companies releasing truthful financial statements is such a fundamental part of our market, that very firm rules and penalties need to be in place to encourage honesty at all costs. If we can't trust the financial statements, then how can anyone intelligent invest at all? The problem was in the past, a company was better off fudging the numbers and taking a slap on the wrist quarters or years later than being honest and facing the market with disappointing numbers. Hopefully Sarbanes-Oxley makes it more important to be honest and face the market than lie and face prison.

    reply to this | link to this | view in chronology ]

    • identicon
      Anonymous Coward, 4 May 2004 @ 6:58pm

      Re: No Subject Given

      Sarbanes-Oxley insures only ONE thing... that foreign cometition gets another edge on US companies. The costs of Sarbanes-OXley, worded SO poorly, they make companies spend a LOT of money, time and effort for a lot of changes, MOST of which do nothing for the shareholders, or customers. The people making the laws did not understand the businesses they were regulating, and the people administering these interpretations (the auditors) don't understand much of the business they are regulating. Out operations department had people auditing them that had NEVER worked in operations, nor anywhere in the IT support area! The result, many changes to make sure we document things that do not need documenting. period. Our companies will pay the price. a price our competitors need not worry about.

      Pretty much everyone who doesn't see a problem with Sarbanes-Oxley have no understanding of what it asks, and what is necessary to comply.

      reply to this | link to this | view in chronology ]

    • identicon
      Gary, 16 Nov 2004 @ 2:56am

      Re: No Subject Given

      The Sarbanes-Oxley Act does nothing to protect shareholders. Nothing.

      It adds a law that makes all publicly traded companies need their auditors approval on a lot of things that are often not only unnecessary, they are counterproductive.

      The Auditors often do not have real world experience in the areas where they are dictating changes. The cost in extra audits, as well as adding processes to be compliant far exceed anything they are geared to protect.

      and here's a newsflash for you... added, non-productive, non-value added costs to all U.S. publicly traded companies adds an additional barrier to their ability to compete with private domestic companies, as well as foreign companies not burdened with this horrible law that only benefits the audit companies (who are making out like bandits right now!)

      It also adds a HUGE disincentive for any company that was even *thinking* if issuins an IPO. Now they do not enter the market, and they save all those unnecessary costs.

      The Sarbanes-Oxley Act is bad for business and bad for the U.S. It needs to be repealed and repealed soon!!

      reply to this | link to this | view in chronology ]

      • identicon
        JerryQ, 21 Jul 2006 @ 1:06pm

        Re: SOX

        I tried a couple of years ago to market a tool to help companies make structured decisions according to their policies without interfering with their business. What I saw was this, big accounting/consultancy groups staking their fat marketing budgets on the claim called SOX. Who are 'solving' the issues addressed by SOX? I think the very groups who failed generically to protect those they should have protected.

        reply to this | link to this | view in chronology ]

  • identicon
    A. Lloyd Flanagan, 10 Nov 2006 @ 7:25am

    Silver Lining

    Yes, the requirements are onerous. But in the software field, it seems that a lot of the things that are required are things that they REALLY should have been doing anyway. Like using rollout control process and meeting minimal security standards.

    The benefits to the company of doing these things may turn out to be greater than the cost of compliance.

    reply to this | link to this | view in chronology ]

  • identicon
    John Starling, 30 Jul 2007 @ 1:05am

    Great stuff please read and learn

    Here is the best article I have found explaining why SOX hurts shareholders and why it is terrible for the country.

    I learned a lot I didn't know.

    Also, from a man who is running for President and has written about the subject many times in the past:

    http://www.approva.net/audittrail/20 ...5-years-later/

    Companies are leaving the public sector and capitol is being lost. None of that is good for this country. But those articles are so well written. Please read.

    reply to this | link to this | view in chronology ]

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