Sarbanes-Oxley Draws Criticism: OKC Businessmen Question Effectiveness
Shottenkirk, Jerry, THE JOURNAL RECORD
Few acts of Congress lately have had the business and financial community scrambling as much as the Sarbanes-Oxley Act of 2002.
One of the reasons for the act was in the news Tuesday as the U.S. Supreme Court on Tuesday overturned the conviction of Arthur Andersen, the accounting firm accused of illegally shredding documents as Enron was on trial.
As the public - especially those who lost retirement nest eggs - cried out for reform, the Sarbanes-Oxley Act was created. Officially titled the Public Company Accounting Reform and Investor Protection Act of 2002, Sarbanes-Oxley was put into place in light of the Enron and WorldCom scandals, plain and simple.
But Sarbanes-Oxley is anything but plain and simple.
In the three years since it was approved by Congress, Sarbanes- Oxley has been scrutinized, and in many quarters it has been loudly criticized.
Bad facts make bad law, said Irwin Steinhorn, a corporate attorney for Conner and Winters. If someone wants to commit fraud, Sarbanes-Oxley isn't going to stop them.
Sarbanes-Oxley has many provisions, and two are glaring, Steinhorn said.
What really stands out is the internal controls provision, he said. It's probably one of the more burdensome issues. Second is that it requires the chief executive officer or chief financial officer to certify at each quarter and annual report with the (Securities and Exchange Commission) that financial statements are correct and that internal controls have been effective.
Sarbanes-Oxley has been a strain on businesses and the economy in general, said local accountant Todd Lisle of Lisle and Compton.
It's caused an increase in audit fees anywhere from 20 to 100 percent, Lisle said. With the burden it has had on the business community, is it worth it?
Publicly traded companies are now required to have an internal auditor, and any work done by such an auditor needs to be certified by external auditors. …