SOX - Death of Business in the United States
Not to make too fine a point of it, the Sarbanes-Oxley Act is killing business in the United States. I know that wasn’t the intention, but it is. Our business community won’t die tomorrow but over the next 10 years the best and the brightest of our business community will go elsewhere. That means that most of the innovation on which our way of life depends will disappear. The things that make us grow economically will leave us and we will seccumb to the first law of biology and economics: grow or die.
Fairly harsh, don’t ya think. Yes, but I know because I’ve been in the thick of it since 2003. In all good faith I can say that the initial implementation of the Sarbanes-Oxley Act (SOX) was beneficial. Since then it has become a cancer on business in the United States.
Initially it was rational, now it is completely irrational. The SEC and the auditing industry have lost their minds and more important any sense of materiality.
Materiality is a basic principal taught in Business 101. It means only put you efforts and resources into something that will make a difference to your company. Its the 80/20 rule. 20% of your customers account for 80% of your revenue. 20% of your problems cause 80% of your headaches. You never, repeat never, treat everything with the same sense of urgency. External auditors and the SEC seem to have forgotten this principle or were asleep when the class was given.
Today companies spend 5 times and more with auditing firms then they did before SOX. If I were crass, I’d say its pure greed on the part of the external auditors. Internally businesses spend even more trying to meet the increasingly aggressive and banal requirements of the auditors. This is a pure waste of the share holders’ money. This is the opposite of why SOX was first implemented.
Repeal Sarbanes-Oxley and save the United State economy.
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