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Opinions and views from expert CFOZone members.

Tag >> Sarbanes-Oxley
Mar 17
2011

PCAOB chairman warns of auditor disciplinary actions

Posted by Stephen Taub in Sarbanes-OxleyPCAOBcomplianceauditors

Stephen Taub
The chairman of the PCAOB said auditors of financial companies that contributed to the financial crisis several years ago are now the subject of pending PCAOB investigations and may lead to disciplinary actions against firms or individuals.

"The PCAOB inspected the audits of many of the issuers that later failed or received federal bail-out funds," said PCAOB chairman James Doty at a PCAOB Investor Advisory Group Meeting on Wednesday. "In several cases - including audits involving substantial financial institutions - PCAOB inspection teams identified what they determined to be audit failures of such significance that, in the inspectors' view, the firm had failed to support its opinion."

Doty stressed that under the Sarbanes-Oxley Act, the accounting watchdog group's disciplinary actions must remain confidential until both its proceeding and any SEC appeal are finished, adding that this will take a long time.

Nov 22
2010

Surge in restatements, material weaknesses

Posted by Stephen Taub in Section 404Sarbanes-OxleyRiskrestatementsRegulationmaterial weaknessinternal controlsGlass LewiscomplianceAccounting

Stephen Taub

The number of financial reporting issues is on the rise this year, exceeding multi-year lows set last year.

In the first nine months of 2010, about 20 percent more companies filed restatements to correct accounting errors or reported internal-control weaknesses than in the first three quarters of 2009, according to a new study published by Glass Lewis.

Aug 17
2010

Punish shareholders for managers' sins? By all means

Posted by Ron F in Securities and Exchange CommissionSarbanes-OxleyRegulationfraudfinancial reportingfinancial crisisEnroncomplianceCitigroupAccounting

Ron F

Barry Ritholtz today usefully repeats a point he made earlier this month in connection with an Andrew Ross Sorkin column about the SEC's proposed settlement with Citigroup and the court's refusal to go along with it.

And that is that shareholders of companies run by corrupt management are supposed to be punished.

Aug 12
2010

Reining in the PCAOB

Posted by Going Concern in Securities and Exchange CommissionSarbanes-OxleyPublic Company Accounting Oversight BoardPCAOBCPAscomplianceBig FourBig 4auditorsauditingauditAccounting

Going Concern

Submitted by Caleb Newquist, republished from Going Concern, Accounting News for Accountants and CFOs.

The PCAOB has had a pretty good run of late. It all started with the SCOTUS handing them a loss that was really a win and the Board has, most recently, gotten ambitious with new risk assessment standards. What's more is the call of acting Chair Dan Goelzer to have the Board's enforcement inspections held publicly so audit firms can't get all mysterio about what they did and did not do to warrant said inspection.

Jun 30
2010

Why the spirit of SarbOx will survive continued attack

Posted by dbedell in SarbOxSarbanes-OxleyRiskPCAOBinternal controlsinternal auditIn compliancecontrol

dbedell

With the Supreme Court ruling to uphold most of SarbOx, and compliance costs decreasing, policymakers and their opponents continue to fight over the relative value of the legislation that first came into effect in 2002. But it may be a non-issue. Even as opponents of SarbOx continued to push for it to be overturned in the run-up to the Supreme Court ruling, it had already become an expected and integral part of the corporate internal audit process.

One lawyer who spoke with CFOZone before the ruling was announced noted that no client has asked him how they could backtrack on controls and other compliance requirements if SarbOx was overturned. Investors now expect that companies will be SarbOx compliant, and in the current environment of compliance conservatism, even if companies could reduce their internal audit requirements under SarbOx, few if any would.

Jun 29
2010

Court decision undermines PCAOB's independence

Posted by Ron F in Supreme CourtSecurities and Exchange CommissionSection 404Sarbanes-OxleyPublic Company Accounting Oversight BoardPCAOBFASBcomplianceauditorsauditingAccountingaccountants

Ron F

We're not quite as sure as others are that yesterday's Supreme Court decision regarding SarbOx is so utterly meaningless regarding the future of the Public Company Accounting Oversight Board.

Sure, the court said the law is still fully in effect, blah, blah, blah.

Jun 28
2010

Internal auditors must surpass Sarbanes-Oxley

Posted by dbedell in Sarbanes-OxleyRiskinternal controlsinternal auditcomplianceauditors

dbedell

Since the Sarbanes-Oxley legislation first came into effect seven years ago, much has changed in the US corporate landscape. At first, the new laws appeared onerous—time consuming and perhaps just a little bit of overkill. Since then, the global financial crisis occurred—putting much greater focus on internal audit, control and corporate accountability.

That focus was pushed from within companies themselves, not just from regulators or legislators, which may be why companies are coming to appreciate the benefits of Sarbanes-Oxley—at least according to a survey by global risk and business consultants Protiviti. In fact, companies report that Sarbanes-Oxley does not go far enough in having companies assess and audit risk.

May 11
2010

Do CFOs add or subtract value as board members?

Posted by SherylNash01 in Sarbanes-Oxleycorporate governancecorporate boardscareer/management

SherylNash01

While shareholders and Sarbanes-Oxley demand more independent directors on boards, a new study shows companies with boards that have at least one key insider, the CFO, are better at financial reporting than those without that executive on their boards. But that doesn't necessarily mean that all companies should appoint their CFOs to their boards, not at least without taking other considerations seriously into account. In fact, most companies probably should still look elsewhere for the expertise that CFOs supply.

The study found that companies with CFOs on their boards have more effective internal controls over financial reporting, higher accrual quality and a lower likelihood of restatements.

The study measured the quality of financial reporting by examining the incidence of material weaknesses reported under Section 404 of Sarbanes-Oxley. The provisions require companies to document and test internal control over financial reporting, and the company's independent auditor to independently test those controls and opine on internal control effectiveness.

May 04
2010

Financial reporting issues surge

Posted by Stephen Taub in Section 404Sarbanes-Oxleyrestatementsmaterial weaknessinternal controlsGlass Lewisexpense recognition errorscomplianceAccounting

Stephen Taub

Are companies become more lax with their accounting practices? It seems so.

According to an analysis of first quarter regulatory filings, Glass, Lewis found a surge in financial-reporting issues, a sharp reversal from recent trends.

Mar 16
2010

What Dodd or others can’t mandate

Posted by Stephen Taub in sox 404Say on PaySarbanes-Oxleyratingsexecutive compensationdirectorscredit-rating agenciesCredit RatingsConsumer Financial Protection AgencyChristopher DoddChris DoddbankruptcyBanking

Stephen Taub

You have to hand it to Senator Chris Dodd. For someone who has heavily depended on the generosity of the largest banks and investment firms for his fund-raising, he has proposed a pretty impressive bill for further regulating the financial firms....given the current environment in Washington, of course.

I am not confident it will prevent another AIG, Lehman or Bear Stearns. The current poisoned partisanship in Washington on both sides of the aisle wouldn't support that kind of onerous bill.

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