The Atlanta Fed's macroblog provides commentary on economic topics including monetary policy, macroeconomic developments, financial issues and Southeast regional trends.
- BLS Handbook of Methods
- Bureau of Economic Analysis
- Bureau of Labor Statistics
- Congressional Budget Office
- Economic Data - FRED® II, St. Louis Fed
- Office of Management and Budget
- Statistics: Releases and Historical Data, Board of Governors
- U.S. Census Bureau Economic Programs
- White House Economic Statistics Briefing Room
April 21, 2005
More On The Aftermath Of Sarbanes-Oxley
It seems that the more obvious demands imposed by Sarbanes-Oxley in financial accounting - the expense, the time investment, the extra audits - are just the tip of the iceberg. The required mix of "proper" business controls and personal liability is causing a chain reaction that affects boards, organisational structures, professional advisers and the daily efficiencies of all public companies - and many private ones, even though technically they are not covered by the act.
The results are having an impact on the way companies hire, structure their organisations, work with lawyers and accounting firms and even choose software systems. They are also driving higher-than-anticipated expenditure in unexpected areas...
Sarbanes-Oxley has also forced a change in companies' relationships with auditors and lawyers. "What it has done is made your outside accountants regulators," says Anthony Abbate, president and chief executive officer of Interchange Bank, a New Jersey-based finance house, and an outgoing member of the Federal Reserve Board.
In the past, he or his chief financial officer could ask an auditor for an opinion on a proposal. Now, he says, "they don't even want to hear about what you're doing. If they say, 'Yes, you can do it,' or they remain silent, they become complicit and subject to their own regulatory body. So you're basically flying on your own."
It appears that not even the "going dark" option is a full solution.
With companies coming to realise the knock-on effects of Sarbanes-Oxley, some are busily trying to jump ship by going private. But in the long run, that will not be a solution.
For a start, private companies such as Wise Metals Group, a Baltimore-based producer of aluminium cans, have become subject to the same tough regulation since starting to offer public bonds...
Private-company status is also no haven from Sarbanes-Oxley. If a private company wants to leave open the possibility of an acquisition, particularly by a public company, it will probably have to show that it is compliant with Sarbanes-Oxley.
The article does note some unexpected positive aspects of Sarbanes-Oxley, but even these might be filed in the category of "creative destruction":
But if there are unintended consequences, they are not all negative. Mr [Michael] Critelli [chief executive of Pitney Bowes] found that the regulation could be used as a tool to force changes he wanted to make at Pitney Bowes - such as increasing shared services. "It turned out to be a blessing," he says.
Combine this with the post-recession oil shocks, and it's almost a wonder that the U.S. economy has done as well as it has.
TrackBack URL for this entry:
Listed below are links to blogs that reference More On The Aftermath Of Sarbanes-Oxley:
- The ZPOP Ratio: A Simple Take on a Complicated Labor Market
- What Do U.S. Businesses Know that New Zealand Businesses Don't? A Lot (Apparently).
- 5-Year Deflation Probability Moves Off Zero
- Should I Stay or Should I Go Now?
- No Wage Change?
- Getting to the Core of Goods and Services Prices
- Different Strokes for Different Folks
- Have Changing Job and Worker Characteristics Restrained Wage Growth?
- Far Away Yet Close to Home: Discussing the Global Economy's Effects
- New Atlanta Fed Series Shows Wage Growth Held Steady in May
- September 2015
- August 2015
- July 2015
- June 2015
- May 2015
- April 2015
- March 2015
- February 2015
- January 2015
- December 2014
- Business Cycles
- Business Inflation Expectations
- Capital and Investment
- Capital Markets
- Data Releases
- Economic conditions
- Economic Growth and Development
- Exchange Rates and the Dollar
- Fed Funds Futures
- Federal Debt and Deficits
- Federal Reserve and Monetary Policy
- Financial System
- Fiscal Policy
- Health Care
- Inflation Expectations
- Interest Rates
- Labor Markets
- Latin America/South America
- Monetary Policy
- Money Markets
- Real Estate
- Saving, Capital, and Investment
- Small Business
- Social Security
- This, That, and the Other
- Trade Deficit
- Wage Growth