Magazine article Newsweek

A Puzzling Problem; CEOs Worry about a Weak Dollar, but They Also Complain That Tough New Regulations Are Hurting America's Competitiveness

Magazine article Newsweek

A Puzzling Problem; CEOs Worry about a Weak Dollar, but They Also Complain That Tough New Regulations Are Hurting America's Competitiveness

Article excerpt

Byline: Keith Naughton (With Jennifer Ordonez)

Tupperware CEO Rick Goings wants America to throw a new kind of party, where "decadent desserts" are made with his company's kitchen gadgets. But his marketing budget is being diverted instead to auditors who treat his execs "like criminals" in order to comply with stringent new regulations aimed at preventing another Enron. Goings gripes that they've tripled his auditing bill and cut profits 10 percent. It's enough to send the all-American company packing. "You start looking around and saying, 'Maybe I ought to be a public company in a more reasonable market'," he says. "Like Germany."

The weak dollar might seem scary, but what's really frightening business executives these days are these tough new regs. They seemed like such a good idea three years ago, when Congress rammed through the Sarbanes-Oxley law in the wake of massive accounting fraud at Enron and WorldCom. But now one provision that requires more oversight by auditors has triggered a backlash. Companies have discovered that the cost of complying with this reg is 30 times as expensive as originally predicted. The total tab: $35 billion. CEOs warn that SOX is simply enriching accounting firms, while impoverishing budgets for R&D, marketing and hiring. "We're importing accountants from India and exporting engineers to China," fumes Alex Davern, CFO of National Instruments, an Austin, Texas, software firm. Auditors asked him to produce every key to his Dublin data center to prove no one had tampered with the computers. …

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