Thats why technology pros might be cheering news from Sept. 25 that former Federal Reserve Chairman Alan Greenspan panned SarbOx, which is designed to force companies to document processes, vouch for financial results and help prevent the fraud perpetrated by companies such as Enron. While SarbOx isnt targeted at IT specifically, the act has fallen into the laps of CIOs, who have become the fall folks for implementing what could be called the Consultant, Accountant and Lawyer Full Employment Act.
"One good thing: SarbOx requires the CEO to certify the financial statement. Thats new, and thats helpful. Having said that, the rest we could do without. Section 404 is a nightmare," said Greenspan at a meeting of the Massachusetts Technology Leadership Council in Boston.
He said the evidence is clear that SarbOx strictures are driving initial public stock offerings away from the New York Stock Exchange and to the London Stock Exchange. "The pressure on getting 404 significantly altered is rising and is taking on a critical mass," Greenspan said.
Our take: SarbOx is worth saving. And "significantly altered" shouldnt mean scrapping the act in its entirety. It should mean easing the burden for smaller companies, which spend a disproportionate amount of money on compliance. SarbOx should remain largely as is for folks at larger companies, who have already documented processes, jumped through SarbOx hoops and restated financials. Why? It has been painful, but well bet companies operate better with documented controls in place.
Compliance officers tell us that companies already should have been doing much of what SarbOx calls for in the notorious Section 404. And even though tech pros had to do its share of the grunt work, there were some benefits. "Sarbanes-Oxley in many ways has made IT more rigorous," said Steve Phillips, CIO of computer component maker Avnet, in Phoenix.
Sure, SarbOx is painful, but the adaptations to its requirements have already been made at most companies. If indeed SarbOx is driving business out of the United States, lets look seriously at deeper structural changes. But above all, lets do no harm. A sudden, massive change in SarbOx may mean only more consultants, lawyers and accountants getting involved in implementing the transition.
We agree with Greenspan that its a good thing in that it makes CEOs accountable for corporate financials, and we strongly believe that any changes to the act must preserve that basic requirement. If not, it sends a message to corporate leadership that if you wait long enough, reforms will be overturned and then its safe to return to business as usual.
With Enron and WorldCom in mind, we think its better to never forget.
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eWEEKs Editorial Board consists of Jason Brooks, Larry Dignan, Stan Gibson, Scot Petersen and Lisa Vaas.