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Talk:Sarbanes-Oxley Act

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[edit] Another Business Trend Bandwagon?

SOX often reminds me of the ridiculous amount of money which companies threw at the Y2K bug. It seems like just another excuse for IT and accounting vendors to sell extra services of questionable worth. Every couple of years business latches onto another silly craze such as ISO-9001 compliance, Six Sigma, Y2K compliance, and now SOX compliance. Can someone find some sources for this type of criticism? -The preceding unsigned comment was added by 212.25.75.66 (talk) 11:17, 6 December 2006 (UTC).

The Y2K bug was real. Don't for one second imply it wasn't. Know anything about WORKING STORAGE? Probably not. Limit your opinions to things you know something about.
Um, no - it's a requirement of American Federal law for publicly traded companies. It would be a trend if it was optional - people face severe legal penalties if they don't comply! 65.95.109.97 06:04, 8 December 2006 (UTC)

I agree.. the penalties are serious and real. Regulatory compliance isn't a reaction to WorldCOM, it's a direct result of legislation. Whereas, one may rightly believe that the Sarbanes Oxley Act itself was a reaction, the reality of complying with Sarbanes Oxley does not represent sleazy vendor's interests. Although such capitalizing enterprises probably do exist.67.162.163.191 02:57, 25 June 2007 (UTC)

This is true enough, provided that you are in the US - however, service industry elements (mostly financial services / auditors) are pushing SOX compliance worldwide, even for companies that have no interests in or dealings with the US. There are good reasons why they may be required to anyhow; the USG feel that any company worldwide with more than 300 shareholders in the US is subject to this law, even if they don't trade shares on US stockmarkets; this gives a lot of financial firms leverage to try and scare european companies into implimenting SOX compliance programmes, even when they don't need to. That said, I have no idea how the USG plan to monitor or force compliance by non-US firms with no US publicly traded shares, but which are caught by this umbrella.

SOX can not and is not enforced upon companies which are not publicly traded on US boards of trades. However, a number of European countries have similar legislation and Japan is in the process of enacting similar legislation in the near future.Shelshula (talk) 20:17, 8 June 2008 (UTC)


A particular concern is that compliance with the law (particularly its provisions to shift personally identifiable data to the US, on demand, possibly without the express permission of its subject) automatically breach the much stricter data protection laws in Europe. DaveHowe 10:25, 27 June 2007 (UTC)

"SOX often reminds me of the ridiculous amount of money which companies threw at the Y2K bug." - Why was it ridiculous to (1) identify a problem) and (2) send money to avoid it? I am amazed at the number of "pundits" who identify Y2K as some kind of hoax or scam, when in fact it was a real problem that was dealt with in a serious and timely manner. —Preceding unsigned comment added by Gbrims (talk • contribs) 18:56, 4 August 2008 (UTC)

[edit] The Future of SOX 404 Compliance

Does the article cited really have all those misspellings? For example:

  • "Understandable" where "understandably" was clearly meant?
  • "Shoed" where "showed" would be proper.

If not, these should be corrected; otherwise, a [sic] or three might be in order. Robert A West 15:42, 15 Jun 2005 (UTC)

PCAOB is now considering changing Auditing Standard 2 and quite a few other important elements. Please refer to http://www.pcaob.com/News_and_Events/News/2006/12-19.aspx to update the current status of SOX. I tried but my comments were deleted.171.18.2.84 14:18, 23 January 2007 (UTC)

Per the PCAOB Auditing Standard No. 5 supersedes Auditing Standard No. 2. Auditing Standard No. 5 was approved by the Securities and Exchange Commission on July 25, 2007 and is effective for audits of fiscal years ending on or after November 15, 2007.Shelshula (talk) 20:26, 8 June 2008 (UTC)

[edit] Section 5: Criticism

How about a Criticism section? Acirema 05:50, 16 May 2007 (UTC)

No. Wiki isn't for opinion, it is for information. Disadvantages and advantages can be quoted, but save criticism and praise for message boards.

Almost every wiki article has a criticism section so what the hell are you talking about? As long as the criticisms are properly referenced it is a legitimate section. I'm disappointed this article lacks such a section as Ron Paul often criticizes this and I'd like to know why. JettaMann (talk) 16:54, 25 January 2008 (UTC)

Many articles have a critical section in them, This one clearly needs one and I feel it will be very extensive. As stated before there are countless experts who have stated problems with SOX 404.. It should be included in a way that the average reader will understand.Mantion 05:38, 30 May 2007 (UTC)

SarBox has come under such withering fire, I can't believe the criticism section is missing (excised?). Whoever the anonymous second poster is, they are not quoting official policy. - MSTCrow 00:50, 11 June 2007 (UTC)
Starter bit, SarBox has decreased investor confidence, cost of implementation (this is from April 2006, cost estimates have since skyrocketed about the figures given): http://www.nationalreview.com/nrof_comment/kerpen_factor200604070838.asp

A criticism section should only be posted when there is also a proponents section. They should balance each other. Otherwise the page is likely to be tagged as biased. Additionally, the criticism section should be more then just quoting the unsubstantiated opinions of two people as to why they think SOX is bad. The criticism section should include things about cost benefit, or effectiveness, or anything actually measurable. Shelshula (talk) 21:15, 8 June 2008 (UTC)

John Dvorak is mentioned in the criticism section. I laughed. If a computer guy - well known for unsubstantiated comment - is the best we can do then maybe the section needs to go away. Yankoz —Preceding unsigned comment added by 66.57.20.50 (talk) 11:02, 21 July 2008 (UTC)
The Wall St. Journal and Ron Paul are legitimate sources. The section should remain. Grundle2600 (talk) 20:35, 12 September 2008 (UTC)
Can we get a consensus on this rather volatile subject? I basically agree with Shelshula's comment of 8 June 2008. However, one of the definitions of "criticism" is "the act or art of analyzing and evaluating or judging the quality of a literary or artistic work, musical performance, art exhibit, dramatic production, etc.". I think that is what should be implied by the word in this context. Unfortunately, another, more commonly used, and equally valid definition is "the act of passing severe judgment; censure; faultfinding". To avoid misunderstanding, I suppose we could use some synonym for the first definition I used, but I honestly can't think of any neutral word as good as criticism.
So, how about merely adding two sub-sections under Criticism? Call them Positives and Negatives or Pro and Con, keep them in that order, then put the appropriate criticisms in their appropriate subsections. Without entries in both subsections, a Criticism section is inappropriate, however, since Wikipedia should remain neutral and objective, something that's hard for most of us to do, but it's the right thing. As long as there are constructive criticisms (true objectivity, no "flaming") from both sides, not just one side, and they're within Wikipedia guidelines, that should satisfy legitimate needs for such comments. How about it? -- SFFrog (talk) 23:47, 12 September 2008 (UTC)


Billymuscles (talk) 00:00, 8 November 2008 (UTC) says:

Criticism is not positive; consequently, a contrasting "Praise" section is necessary. Providing sources for all criticism and praise is essential to maintain neutrality and to avoid the appearance of the cited criticism or praise being perceived as the opinion of the author of the respective sections.

Sorry, had to cut lines from the WSJ editorial as they introduced unsourced claims. I put in context for the sourced claims made in the editorial. Sorry, but the numbers in the WSJ piece were too selective. I like the idea of a criticism section, but it's a tricky thing. Simply stating "X said Y" when Y is not well-sourced is not cricket, in my view.--Dlawbailey (talk) 03:25, 5 April 2009 (UTC)

[edit] Pending litigation section

Do not put extreme POV unreferenced material in this article. The SOX violation section was written with no attempt was made to write a balanced article. User:x0000grb has only made contributions on this topic, and appears to have a conflict of interest. I find it difficult to assume good faith. Wikipedia is not a soapbox Bardcom (talk) 11:35, 1 April 2008 (UTC)

[edit] Section 4.2 - SOX Section 404: Assessment of internal control

This section repeatedly uses the word "recently" which is very inappropriate for an encyclopedia entry. Actual dates should be referenced, or at least reasonable time frames, so that future readers know when the heck something happened.

for example: "The recently released Auditing Standard No. 5[17] of the Public Company Accounting Oversight Board (PCAOB), which superseded Auditing Standard No 2., has the following key requirements for the external auditor:"

Auditing Standard No. 5 was approved by the Securities and Exchange Commission on July 25, 2007 and is effective for audits of fiscal years ending on or after November 15, 2007.

Reading this article in June of 2008 means there was nothing recent about those changes.Shelshula (talk) 20:49, 8 June 2008 (UTC)

OK, thanks. This has been fixed. -- Ssilvers (talk) 21:09, 28 August 2008 (UTC)

[edit] Dispute tags

This article has been tagged as disputed for a long time. Are the disputes still active? If so, what are the remaining issues? If not, can the page be cleaned up, so the tags can be removed? --Elonka 04:36, 3 August 2008 (UTC)

I removed the tags. Looking at the article it seems that everything is solid. There should be a little more references but nothing major. --Patrick (talk) 03:18, 15 August 2008 (UTC)
The article is not solid. It's disorganized, incoherent in places, and fails to fairly and neutrally address criticisms of the law--the few parts of the article that include critical academic work have unsourced rebuttals that violate WP:OR and WP:NPOV. There's no mention of the constitutional problems with the PCAOB that could result in the entire law being invalidated. The "history & context" section is particularly one-sided. THF (talk) 13:17, 17 August 2008 (UTC)
How about tagging the specific areas that need to be addressed? Rather than having a blanket "this article is bad" tag at the top, use templates such as {{POV-section}}, {{POV-statement}}, etc. --Elonka 19:01, 17 August 2008 (UTC)
But the whole article is bad. THF (talk) 22:51, 24 August 2008 (UTC)
Can you be more specific on what exactly is bad about it? --Patrick (talk) 00:28, 25 August 2008 (UTC)
Ted works for AEI, which is an anti-regulatory think tank. He is a tough customer! I've debated parts of this article with him in the past. He would like the history and context part to be more balanced, but I don't think there is an "alternate history" of how SOX came to pass. Big corporations got out of control and they got slapped down hard once it got really obvious. He probably thinks the market would have handled this on its own (e.g., self regulation through "Financial Reporting Insurance" and resulting financial control ratings from auditors or rating agencies). Would have resulted in a streamlined 404, most likely. But that is an alternate reality that did not occur. The Chairman of the SEC had been warning since the mid-1990's, but nobody listened until it became a crisis and we all lost a lot of money. Sarbanes has gone on record multiple times with the storyline included and I believe the hearings are public record. But he has some good ideas from time to time, which I've tried to include.Farcaster (talk) 02:36, 25 August 2008 (UTC)
The tags at the top of the page seem very unnecessary. I ill remove unless there is a substantive objection here.Traditional unionist (talk) 01:05, 17 September 2008 (UTC)

The leading note about neutrality of this article being in dispute should remain. Consider please that “Mark to Market” in Sarbanes-Oxley is not discussed and yet it is a main reason for the USA financial market instability of 2008. This is highly political!

“Of the $700billion, $500billion could be eliminated by suspending Sarbanes-Oxley and letting market forces work.” Newt Gingrich (9/29/08)

www.HeritageInstitute.com/governance/Sarbanes-Oxley.htm

www.openmarket.org/2008/09/29/bailout-fails-move-on-to-mark-to-market-reform/

CharlieShipp (talk) 13:46, 30 September 2008 (UTC)

Mark to market is not part of Sarbanes-Oxley. It is part of a separate accounting standard. The comment doesn't make sense. Don't let conservatives fool you here; they make stuff up all the time.Farcaster (talk) 13:50, 30 September 2008 (UTC)

Thanks for comments; your bio is well-lived and impressive; good charts too. Yes, other Conservatives have said the same thing about ‘mark to market’ and SOX. From Sarbanes-Oxley Act of 2002 we read in section 108 ACCOUNTING:


"... the Commission may recognize, as `generally accepted' for purposes of the securities laws, any accounting principles established by a standard setting body ..."


I’ll search NYT, W-Post for leading, learned Liberals who support the premise. CharlieShipp (talk) 11:27, 1 October 2008 (UTC)

Hello Charlie, SOX is costly for companies, particularly small companies. I hope they exempt small companies. SOX talks about internal company processes and how they are controlled (e.g., signoffs, reviews & approvals, audit committee independence, etc.). Mark-to-market in the subprime crisis relates to forcing companies to write down assets that they cannot sell and is part of a separate accounting standard. In some cases, this write-down makes the company subject to a margin call. In english, I loan you some money and you buy a mortgage-backed security. Defaults on the mortgages paying cash into that security go up and nobody will buy that security on the open market. So you bought it for $100 and you must mark it down to $50. That triggers a clause in our contract that enables me to get my $100 back. You see the problem...I gave you $100 and you must give me $100 back, but you can only sell the asset for $50 in the short run. In truth, that asset might be collecting cash worth $75, but mark-to-market won't let you value it like that if accounting firms put their heads in the sand. This bankrupted a lot of mortgage companies. It isn't so much the mark-to-market as the margin call aspect. Suspend the margin calls is a better idea.Farcaster (talk) 13:57, 1 October 2008 (UTC)

[edit] Euro-SOX Schto eto?

http://www.ftd.de/technik/it_telekommunikation/:Digitale-Dokumente-Deutsche-Firmen-spielen-auf-Risiko/415430.html

213.52.175.218 (talk) 09:57, 21 September 2008 (UTC)

[edit] Mortgage Crisis

Is it worth adding that many economists are blaming the acts clauses on "Mark to Market" restrictions, as a significant cause of the current situation in the markets? [1] [2] [3] Charles Edward 00:14, 2 October 2008 (UTC)

See above. Mark to market is NOT part of Sarbanes-Oxley. It is part of FAS 157, a technical accounting standard. If SOX were repealed, it would still be out there.Farcaster (talk) 00:17, 2 October 2008 (UTC)

My sources above directly contradict that.

Mark to market is a Sarbanes Oxley accounting rule that requires holdings, assets, and loans be valued at their current value. It was aimed at keeping company’s books on the up and up but it has devastated banks and mortgage lenders in the housing slump.[4]

Do you have a source? Charles Edward 00:21, 2 October 2008 (UTC)

You quoted the source correctly; the source is wrong. Try this: http://sec.gov/news/press/2008/2008-234.htm. There is nothing in there about SOX. Also, bring up the SOX Act and search for "fair value" or "mark to market." I've never seen it in there.Farcaster (talk) 00:27, 2 October 2008 (UTC)

Fair enough, and good enough for me :) Thanks Charles Edward 00:30, 2 October 2008 (UTC)

Consider this: Sarbanes-Oxley has become an ‘umbrella’ term, including mark to market accounting. Even with the http://en.wikipedia.org/wiki/Mark_to_market entry, the term 'Sarbanes-Oxley' commonly covers the legislation acts and directions that reacted to Enron, WorldCom, and others at the top of this article. Charles Edwin Shipp (talk) 9:45, 17 March 2009 (PT)

From the Sarbanes-Oxley Act of 2002 we read in section 108 ACCOUNTING: "... the Commission may recognize, as `generally accepted' for purposes of the securities laws, any accounting principles established by a standard setting body ..." including mark to market. Charles Edwin Shipp (talk) 9:45, 17 March 2009 (PT)

Just to be perfectly clear, the Sarbanes-Oxley Act of 2002 (SOX) and Mark to Market accounting are entirely separate issues. If SOX were repealed, we would still have mark to market accounting, which is part of FAS 157. Likewise, if mark to market is adjusted or eliminated, we would still have SOX. THEY HAVE NOTHING TO DO WITH EACH OTHER. Trying to combine the two is a game being played by some powerful conservatives who want the SOX law repealed. They are playing loose and fast with the facts. Bear in mind also that suspending mark-to-market is very controversial. If banks are not required to write-down their assets to the most objective measure--what like-kind assets have sold for recently--we will never know how healthy they are. This increases the risk of a Japan-like stagnation. On the other hand, marking assets to market rather than a reasonable estimate of expected cash value kills small finance companies because they are then faced with margin calls. Companies that borrowed and made good loans have gone bankrupt or nearly so (see Thornburg Mortgage and American Capital Strategies for examples of companies that could no longer get funding because their performing assets had to be marked down significantly, for no apparent reason.)Farcaster (talk) 05:22, 18 March 2009 (UTC)

To Farcaster: Thanks for all you have taught me and readers here. Your bio is well worth reading, with charts and dollar amounts, highly recommended reading. And your prior comment was excellent (but I am just an observer, not in your line of work, so can't totally judge.) As you said,

"... It isn't so much the mark-to-market as the margin call aspect. Suspend the margin calls is a better idea.", Farcaster (talk) 13:57, 1 October 2008 (UTC)

Thank you for your diligence, although others may hold to the 'umbrella term.' Charles Edwin Shipp (talk) 13:26, 18 March 2009 (UTC)

Retrieved from "http://en.wikipedia.org/wiki/Talk:Sarbanes-Oxley_Act"
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