Wednesday, March 30, 2005
Corporate backlash over Sarbanes-Oxley
That sliver of the law, called Section 404, requires companies and third- party auditors to document, in rigorous detail, their procedures for assuring the accuracy of their financial statements. It further forces companies to disclose any weaknesses in those procedures, called internal controls.
Companies blame Section 404 for billions of dollars in auditing and legal costs that they say are out of whack with whatever safeguards investors might gain. Last week, thousands of publicly held companies scrambled to meet their first filing deadline under Section 404. Many filed for 15-day extensions.
The debate appears headed for a showdown between powerful corporate interests and shareholder-rights groups concerned that tinkering with Section 404 will lead to a weakening of hard-won antifraud measures.
"It's intense and it's costly and it's never enough," said Gregory Lichtwardt, executive vice president and chief financial officer of Conceptus Inc., a San Carlos maker of surgical devices with fiscal 2004 sales of $11.6 million. "We will spend $1.5 million (to comply with Section 404), between the cost of outside consulting and outside auditors."
posted by Brian Moran @ 10:58 AM