Sarbanes-Oxley v. Dodd-Frank White Paper

Dr. Lewis Kerman
Published Date: 
29 Dec 2012

A few years back, I originally wrote this white paper to describe the past, present and future of the Sarbanes-Oxley Act.  Most of us remember the debacle of the Enron collapse.  In an astounding revelation of risky “off-book” enterprises, Enron’s investments paled, and the company imploded as confidence sank to zero.  Employees, whose entire pensions were invested in the company’s stock, were left with nothing.  Stockholders were left with nothing.  “Whistler-blowers” did their best to help convict a large number of Enron big-wigs, but the whistle-blowers got nothing too. But as of 2011, only a few were convicted, and Ken Lay, its president, died before his appeals were up, so technically, he’s never even been convicted.

That sets the scene for the enactment of Sarbanes-Oxley (“SOX”), a measure intended to make companies more transparent in their activities, both from an accounting point of view and from a securities point of view.  Most accountants and most companies have focused on the accounting side of things – rules and regulations which limit the role of consultants, independent auditors, and partners in the firms which do the accounting and auditing.  Officers at the “C” level in companies took on greater responsibility for guaranteeing the efficacy of documents produced and were chastised by the threat of penalties, including jail time, for mistakes.  “Puffing,” “White Lies,” and “Cookie Jar Economics” would no longer be tolerated.  And truthfulness without candor would be punished.

Click on the link below to download the full white paper.

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