Thursday, April 21, 2005
Anti-Fraud Law Requirements Scrutinized
Key requirements of the landmark anti-fraud law born of the corporate scandals are getting critical scrutiny nearly three years later as legions of companies complain that the rules are too burdensome and need to be eased.
As memories fade of CEOs being led off in handcuffs, the Enron and WorldCom bankruptcies, and consecutive-day plunges in the Dow averages, the chorus of complaints from all corners of corporate America has risen, especially in recent months.
Smaller public companies have been the most vocal about what they say are the burdens and costs of new reporting requirements that came in with the 2002 law, known as the Sarbanes-Oxley Act.
Executives have gotten a sympathetic ear in Congress, and the government's top securities and accounting regulators have said they plan to tweak the rules in a way that could lighten the perceived burden on companies.
The law, which required the most far-reaching changes in corporate accountability since the Depression, created stiff new criminal penalties and jail terms for company fraud; installed new oversight of the accounting industry; required CEOs to personally certify their companies' financial reports, and held company directors responsible for new areas of corporate activities.
But it is the section of Sarbanes-Oxley requiring stronger internal financial controls that has raised protest from corporations.
The chairman of the Securities and Exchange Commission, William Donaldson, said last week that the agency was weighing possible revisions to the rules governing what companies must disclose about their internal controls.
posted by Brian Moran @ 9:27 AM