VitalAccurateThinking

Not a Pendulum, But A Hammer

Once again, Jim VAT must disagree with Loren Steffy of the Houston Chronicle. Steffy thinks Sarbanes-Oxley is a result of a pendulum; instead, SOx is hammer used to beat honest companies into some sort of tenderized meat. What Steffy fails to understand is the SOx regulations are not just a cost issue, but a drain on productivity. SOx requirements divert the efforts of the most productive middle managers to comply with worthless regulations and suffer through internal audits then the equally worthless external audits. It is really the time spent and the resultant decrease in productivity that is at the core of the issue. There are endless opportunities to improve operations and company performance. The only limit is the time, energy and creativity of employees. When their time and attention is diverted to talk to some accountant just out of college over the phone, those opportunities are lost forever. And companies don't add productive people as a result of SOx; they add more (you guessed it), unproductive accountants who don't know a thing about the business. No only that, the experienced accounts who actually help the business leave the company to work for private companies not subject to SOx.

I speak from experience; Steffy speaks from, well, a newspaper column. I wonder if the Houston Chronicle or its parent company has subjected their finances to SOx scrutiny. Of course, Jim VAT is not at liberty to divulge how much his company has spent on SOx compliance nor how many man-hours wasted on such. If there was uniform reporting of such, I would venture to say it would be a huge number.

Overall, I would say the accounting and consulting industry has created a boom. The auditors screwed up big time with Enron and now, they legislated themselves a paycheck. That is the real result of SOx legislation.

posted by Jim VAT @ 8:44 AM