The Sarbanes-Oxley Act of 2002 was created to protect of the investing public, shareholders of public corporations, and employees of these public organizations. Looking back, do you think that former employees of Enron would have appreciated an act like Sarbanes-Oxley aimed at maximizing oversight of accounting procedures? Many high level executives have expressed such displeasure with the cost, time and confusion the act has caused, that many CFO’s around corporate America have considered resigning their positions. Sure, there may be some major or minor adjustments that need to be made to the Act as the wrinkles are worked out, but that’s part of the process. The premise of protecting the innocent investing public and shareholders from fraudulent activity is sound, and will have long-term benefits for the general public.
Corporate executives are clearly wary of the newfound accountability the law requires of them with regard to their company’s financial reporting. Fearing that they could be held liable for something they were not aware of is uncomforting. Then again, they are compensated highly for this responsibility, and simply need deal with it. Corporate executives need to ensure, now more than ever, that proper compliance control measures are in place, to mitigate the possibility of fraudulent activity within the organization.
Ultimately, there needs to be an efficient balance in place within organizations that allows the Sarbanes-Oxley Act to have it’s intended impact, while allowing organizations to still operate profitably and efficiently. This will not happen overnight, however, both sides, the government and organizations need to work together to achieve this balance. Those that are angry with law need to be patient. Some say that Wall Street works best when fear and greed are in balance. I couldn’t agree more.