Resources for Sarbanes-Oxley (SOX)

Did Sarbanes-Oxley miss a trick during subprime?

www.livemint.com

During the recent subprime crisis in the highly interconnected banking and financial services in the US, banks did not seem to know one another’s appetite for risk. They (and other investors) also do not seem to have been able to rely on auditors and rating agencies of counterparties to provide an objective measure of the latter’s financial position. This is surprising in a post-Sarbanes-Oxley world, where almost all information and controls are supposed to be monitored. Some years ago, as the CFO of an entity that was listed on NYSE, I was exposed to the full force of the Sarbanes-Oxleys law, or SOX. For a period of nearly 12 months, teams of auditors explored the innards of business at our offices in Montreal and New Jersey, documenting every step of our processes and ensuring that whenever there was the likelihood of a control weakness, this was patched up, and furthermore ascertaining if we were following these processes. Little credence seemed to be placed merely on the views of senior management, and written evidence was always sought. Every month, hundreds of copies of documents landed on my desk for signature, and were then analysed, signed, dated and mailed back. In addition, many of us in the finance team kept copious notes and emails proving that we reviewed what was under our watch. This process, although seemingly onerous, has more positives and negatives. CFOs and accountants have a duty to review, track controls in an overt manner and codify their views on a piece of paper. This is what good bureaucrats do in the government, and a lot of finance is all about governance.

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