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Posts Tagged ‘Sarbanes Oxley’

Miscellany — interesting items that caught my eye during the week.


Francine McKenna is the dean of the accounting bloggers with her re: The Auditors blog.  She never disappoints.  Her comments in “More Sarbanes-Oxley Anniversary Thoughts, ” should be read.


Mark Holtzman, Accounting Department chair at Seton Hall, is an exceptional example of today’s social media enabled professor.  He has three blogs, a twitter feed and a YouTube channel.  Wow.  You don’t want to miss the essay I asked him to write, “Rise and Fall of the Gatekeepers -or- Why I Blog.”  I write more on this later.


Edith Orenstein, FEI Financial Reporting Blog, has published her thoughts following a blogging panel at the American Accounting Association Annual Meeting earlier this week.  Please read, “What Catanach, Albrecht, Holtzman and I Had to Say at AAA.”


Rick Broida at PCWorld writes, “Save a Web Page as a PDF with Just One Click.” He recommends Web2PDF. It’s handy.


Bob Jensen (retired professor from Trinity U) writes, “As the textbook purchasing season begins, I noticed that Amazon.com has free two-day shipping for college students.  I did not investigate the terms and limitations of this offer or whether it applies to used books and food items as well as new books.”  I’ll be sure to e-mail my students about this.  Why don’t you?


Some of you might like, “Top 100 Motivational Quotes of All Time!”  Any more, I need motivation to get out of bed in the morning.


Debit and credit – – David Albrecht


Want more of The Summa? Sign up to receive email notification of posts. And please follow me on Twitter (@profalbrecht).

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Miscellany — interesting items that caught my eye during the week.


James Ulvog writes the Attestation Update blog.  He weighs in on the professor/accountant blogging issue in, “Can’t find anything in the accounting world to blog about? Are you kidding me?

James does a really good job on his blog.


David Milstead writes for the Globe and Mail, Canada’s largest national newspaper.  He has an interesting perspective to share in, “A desperate Obama kicks Sarbanes-Oxley halfway to the curb,” published Monday, October 17, 2011.

A desperate politician will do anything to get reelected.  Obama has already signaled his willingness to ditch LIFO.  What’s next,  IFRS?

The New York Times on Wednesday ran an editorial, “Not Their Job.”  It argues that the Jobs Council overstepped its bounds.  Since the proposal is approved by President Obama, it should have been titled, “Hey Prez, Shame on You!”


Deloitte has become a regular in the accounting news cycle, but not in a good way.  Peter J. Henning’s blog at the NYT, White Collar Watch, has an interesting article on it, “Deloitte’s Quandary: Defy the S.E.C. or China.”


I don’t have an iPhone, but that doesn’t stop me from typing, “Sent from my iPhone,” at the bottom of every e-mail I send.  But I try to stay current on iPhone news just in case anyone ever donates a new phone.

David Pogue, columnist for the New York Times, blogs about iPhone’s new personal assistant Siri in, “Siri Is One Funny Lady.”  He writes about Siri’s responses to his question, “What is the meaning of life?”  Because he kept re-entering the question, he received various responses including the classic, “42.”

I’ve never understood why the film directors for THGTTG considered 42 so funny (the basis for its selection). Why is 42 funnier than 43, 44, or my personal favorite–63?


Sorry, I just can’t resist posting a link to:  ” ‘Man-flu’ is real to a fifth of British women.”

(Reuters) – One in five British women believe that the debilitating “man-flu” disease which temporarily leaves sufferers prostrate on the sofa watching televised sports is real, according to a new study.

I’m speechless.


Are you curious about how a professional sports team uses accounting to prepare financial statements?  I’m not sure you’re going to learn anything from this error-filled and mistaken Deadspin article, “Exclusive: How An NBA Team Makes Money Disappear [UPDATE WITH CORRECTION].”  Thanks to professor Mark Holtzman, the Accounting Ethicist, for the tip.

Shouldn’t a prerequisite to writing an accounting article be that the writer actually knows and understands proper accounting?


Debit and credit – – David Albrecht

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Dear Prof. Albrecht:

Sarbanes-Oxley promised big fines and jail time for executives who signed false financial statements.

But so far there have been no prosecutions.

How about Fannie Mae, Freddie Mae, AIG, Lehman Brothers, Bear Stearns, Countrywide, Merrill Lynch, etc.?

Attorney General Holder needs to start prosecuting ASAP.

Sincerely,
Carl Olson


Dear Carl,

I agree.  A law with no enforcement is no law at all.

CEOs who sign erroneous financial statements should be prosecuted, judged guilty, and given the bum’s rush to jail.

Regards,
Prof Albrecht


Have a question for Prof Albrecht?  Send an e-mail to albrecht@profalbrecht.com.

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Stop!  Don’t move in inch!  Stop!  Hold the presses!

Even if the U.S. adopts IFRS, there is a chance that U.S. GAAP will survive and thrive.

Come again?

If IFRS implementation is anything like SOX implementation, then there is a chance that U.S. GAAP will survive.

It is so obvious, not even Captain Obvious is talking about it.  The rationale for my conclusion starts with a history lesson on SOX.
The Sarbanes Oxley Act of 2002 was passed in the immediate aftermath of (1) the dotcom burst bubble, (2) a huge recession, (3) the WTC terrorist attack, (4) dozens of  accounting scandals such as WorldCom and Enron, and (5) Washington’s perceived need to save the country from itself through increased regulation.  It is said that George H.W. Bush later so regretted his part in SOX’s passage, that he pushed IFRS as a way of making it up to corporate America (IFRS is a gift offering because of itse earnings management capabilities).

Here’s what corporate America thought of SOX.

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A lawsuit challenging the consitutionality of the Sarbanes Oxley Act of 2002 (SOX) is scheduled for review by the Supreme Court on Monday, December 7.

Key provisions of SOX are under attack. It is possible that SOX will be either voided or scaled back in the near future, threatening the very existence of the Public Company Accounting Oversight Board (PCAOB). The PCAOB was created by SOX for its implementation and administration. I hope the PCAOB is able to survive. We need it. Here’s why.

In reaction to (1) many scandals, most notably WorldCom and Enron, and (2) a decades long history of ineffective auditing by the Big 8-7-6-5 auditing firms that contributed to the scandls, Congress passed SOX to help clean up financial reporting in the USA. Did it nead cleaning up? Most certainly. At that time the US clearly had the best accounting standards (rules companies follow as they prepare financial statements) in the world. But some companies were in non-compliance and audit firms were not forcing companies to comply.

The key provisions of SOX are:

  1. Responsibility for the accuracy of financial statements clearly is placed on corporate executives. The CEO is required to sign a statement that the financial statements are correct. Violations leading to convictions result in jail time.
  2. Corporations had to secure an audit of their internal controls, and append the resulting auditor’s opinion to the financial statements. The intention was to give investors some assurance as to whether or not the internal controls were functioning well enough to ensure accurate data from which the financial statements would be prepared. No more GIBO (garbage in, garbage out). Generally accepted audit standards and various SEC provisions already had established that internal controls were to be present.
  3. A PCAOB (Public Company Accounting Oversight Board) was established (appointed by the SEC) to police the auditors. This policing took the form of annual inspections of the big boys, three year inspections of the smaller firms.

SOX should be retained because of these three provisions. Each of them is essential for U.S. capital markets.

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