Comments on: The end of Sarbanes-Oxley? http://www.sequenceinc.com/fraudfiles/2008/07/08/the-end-of-sarbanes-oxley/ Wed, 28 Jul 2010 21:10:11 +0000 hourly 1 http://wordpress.org/?v=3.0 By: Chad Bordeaux http://www.sequenceinc.com/fraudfiles/2008/07/08/the-end-of-sarbanes-oxley/comment-page-1/#comment-161816 Chad Bordeaux Fri, 11 Jul 2008 13:34:00 +0000 http://www.sequence-inc.com/fraudfiles/?p=1646#comment-161816 I worked as the head of the SOX efforts for a public company for several years. I can tell you without a shadow of a doubt that Section 404 was a complete was of time, money, and many other valuable resources for us. It did absolutely nothing to prevent or deter the kind of fraud that could bring the Company to an earth-shaddering end. Sure, there were extremely small (tiny) benefits related to some controls but with the cost in the millions, it would have been way cheaper to leave these controls unchecked. The fact is that is high level executives want to commit fraud, SOX404 is not going to do anything to stop them. Many of the other provisions of SOX are good and reletively easy and cheap to implement. For example, the corporate whistleblower line and others. It seems to me, the only people who like SOX are some Politicians, Auditors, and Consultants. The Politicians like it because they can talk about how it is preventing fraud and that they are doing their job in protecting Americans. Auditors and Consultants like it due to the obvious economic benefits. I will say that many of these Auditors and Consultants are quick to agree (behind closed doors) that the whole process is a waste of time and is in no way cost effective to anyone. I worked as the head of the SOX efforts for a public company for several years. I can tell you without a shadow of a doubt that Section 404 was a complete was of time, money, and many other valuable resources for us. It did absolutely nothing to prevent or deter the kind of fraud that could bring the Company to an earth-shaddering end. Sure, there were extremely small (tiny) benefits related to some controls but with the cost in the millions, it would have been way cheaper to leave these controls unchecked. The fact is that is high level executives want to commit fraud, SOX404 is not going to do anything to stop them.

Many of the other provisions of SOX are good and reletively easy and cheap to implement. For example, the corporate whistleblower line and others.

It seems to me, the only people who like SOX are some Politicians, Auditors, and Consultants. The Politicians like it because they can talk about how it is preventing fraud and that they are doing their job in protecting Americans. Auditors and Consultants like it due to the obvious economic benefits.

I will say that many of these Auditors and Consultants are quick to agree (behind closed doors) that the whole process is a waste of time and is in no way cost effective to anyone.

]]> By: Jeff Barber http://www.sequenceinc.com/fraudfiles/2008/07/08/the-end-of-sarbanes-oxley/comment-page-1/#comment-161737 Jeff Barber Tue, 08 Jul 2008 18:32:38 +0000 http://www.sequence-inc.com/fraudfiles/?p=1646#comment-161737 Sarbanes Oxley was designed to prevent and curtail fraud. While millions have been spent; the legislation missed the #1 risk exposure. Over 1500 publicly traded corporations self insure for their employees healthcare benefits. Claims are paid with corporate assets rather than purchasing insurance. These firms outsource the payment of claims to third party administrators. The administrators have access to the corporate check book with no oversight. 90% of employee hospital bills contain billing errors; yet no one in the corporation knows what the correct price should be Hundreds of CEO's and CFO's have certified the adequacy of internal accounting controls; when in fact their internal audit team are clueless. IF SOX was enforced; many corporations would add $400 per employee in pre tax cash flow as a function of reduced healthcare costs. Sarbanes Oxley was designed to prevent and curtail fraud.
While millions have been spent; the legislation missed the #1 risk
exposure. Over 1500 publicly traded corporations self insure for their
employees healthcare benefits. Claims are paid with corporate assets
rather than purchasing insurance. These firms outsource the payment
of claims to third party administrators. The administrators have access
to the corporate check book with no oversight.

90% of employee hospital bills contain billing errors; yet no one
in the corporation knows what the correct price should be

Hundreds of CEO’s and CFO’s have certified the adequacy of internal
accounting controls; when in fact their internal audit team are clueless.

IF SOX was enforced; many corporations would add $400 per employee
in pre tax cash flow as a function of reduced healthcare costs.

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