SOX Center

This past April, Japanese pitching sensation Daisuke Matsuzaka wowed Red Sox Nation with his “gyroball.” From now until next April, Dave Sackett expects to be equally mesmerized by Japan’s version of the corporate curveball.

The corporate controller of Ulvac Technologies is charged with implementing J-SOX — the Japanese edition of the Sarbanes-Oxley Act (sometimes abbreviated as SOX). The process is a “huge deal” at the Methuen, Mass.-based subsidiary of Ulvac Inc. of Japan because the private firm (the parent is public) has never thought much about documenting internal controls or formalizing its audit trail. “Our reporting has been kind of loose in the past, but now we need to document everything,” Sackett says.

CFO.com: CFOs and controllers at U.S. subsidiaries of Japanese firms begin implementing the Japanese version of Sarbanes-Oxley.

 Grilling the assembled members of the Securities and Exchange Commission about Sarbanes-Oxley, Barney Frank just took the time to note “I feel compelled by the spirit of bipartisanship to come to the defense of the Republican president and the Republican Congress that passed [Sarbanes-Oxley].”

CFO.com: SEC: No Help Needed from Congress

The Department of Labor’s Administrative Review Board has ruled that a whistleblower’s accusations were not protected under the Sarbanes-Oxley Act whistleblower protection provision, CFO.com reports.

David Welch, former CFO of Virginia bank Cardinal Bancshares, in 2004 was the first person to win whistleblower protection under SOX. Welch said the bank fired him after he raised questions about the bank’s accounting policies and internal controls. In June 2006, a Labor Department judge ordered that the bank reinstate him and restore pay and benefits.

The bank appealed, leading to this most recent ruling by the Labor Department’s appeals board.

SmartPros: First SOX Whistleblower Loses Case

IRS agents are drilling dry holes during corporate audits, the Japanese version of Sarbox, a new spin on insider trading, issuing debt without all the paperwork, and how to keep workers safe, but also help them die.

When Mark Everson took office in 2003 as commissioner of the Internal Revenue Service, he promised that collecting underpaid corporate taxes would be a top priority, and backed it up by increasing the number of large corporate audits. Results were quickly realized, with additional recommended taxes doubling in fiscal 2005 compared with the previous year (see “Crackdown,” January 2006). But now Syracuse University’s Transactional Records Access Clearinghouse (TRAC) suggests the effort may have run out of steam.

CFO.com: Not So Taxing?

Five years after being the first to file for whistle-blower protection under Sarbanes-Oxley, former CFO David Welch has lost the family farm and his savings, and still doesn’t have a job.

When David Welch became the first person to win protection under the whistle-blower provision of the Sarbanes-Oxley Act back in 2002, the former CFO of Cardinal Bancshares figured he would be back at work shortly.

“I thought everything would be fine when I filed the complaint,” he recalls. “I just wanted my job back. I enjoyed being a CFO.”

Nearly five years later, Welch is still unemployed, despite a Department of Labor ruling ordering the Floyd, Virginia-based bank to reinstate him. Last fall a U.S. district judge decided not to enforce the ruling.

Cardinal did not respond to multiple requests for comment on this story.

Welch claims he was fired from Cardinal after he raised questions about the bank’s accounting policies and internal controls, and subsequently refused to certify its financial results. The bank argued that Welch was suspended and later discharged solely because he refused to meet with Cardinal attorney Douglas Densmore, of law firm Flippin Densmore, and Michael Larrowe, an accountant whose firm was Cardinal’s external auditor, without a personal attorney.

CFO.com: Five Years Out of Work

Fifty percent of the CFOs who left companies did so for reasons other than finding another job. Those included inability to fit culturally into the organization, the increasingly stressful demands of the position and lack of current knowledge related to Sarbanes-Oxley, according to a survey by Right Management.

CFOs lasted in their positions for more than five years at 48 percent of the 191 organizations surveyed. However, CFOs stayed in their jobs for less than three years at 25 percent of companies. It typically takes between three and five months to replace a departing chief financial executive, according to the survey.

Respondents included primarily human resource managers and executives at mid-sized to large organizations in all industries.

SmartPros: Job Moves Account for Just Half of CFO Turnover

Reeling from the Sarbanes-Oxley blues, backdating scandals, and intense pressure to perform, CFOs (and their bosses) are vacating their offices at an alarming clip.

For years, companies have complained about the short-term focus of Wall Street. Now Wall Street has good reason to complain right back about them. Reeling from the Sarbanes-Oxley blues, backdating scandals, and intense pressure to perform, CFOs (and their bosses) are vacating their offices at an alarming clip. Various surveys estimate the average tenure of a CFO at anywhere from four and a half years to a mere 17 months.

This can’t be good. As Bob Brust, former CFO of Eastman Kodak, comments (see “The Tenure Track”), “If you stay with a company for only three years, you never get to see whether the decisions you made were good or bad; it usually takes five to seven years to really see the results.”

CFO.com: The Three-year Itch?

Double-listed the company’s assets to induce a bank to continue financing its operations.

Steven Garfinkel, former chief financial officer of defunct health-care finance company DVI, was sentenced to 30 months in prison and ordered to pay $51 million in restitution, reported the Philadelphia Business Journal.

Last December, Garfinkel pleaded guilty to mail fraud and to violating the provision of Sarbanes-Oxley that requires CEOs and CFOs to certify financial reports filed with the Securities and Exchange Commission.

DVI provided financing to health-care providers seeking to purchase or lease diagnostic medical equipment; in turn, DVI secured financing from Fleet Bank (since acquired by Bank of America). According to U.S. Attorney Patrick L. Meehan, in a statement last November announcing the charges, Garfinkel defrauded Fleet by double-listing approximately $50 million in assets to induce the bank to lend money to DVI. The finance chief then falsely certified a quarterly report, Meehan also alleged.

CFO.com: CFO to Pay $51M for Fraud, Sarbox Breach

Suit alleges they tried to bridge gaps in the company’s performance by manipulating finances.

The Securities and Exchange Commission charged 4 former Nortel Networks executives with accounting fraud Monday.

Former CFO and controller Douglas C. Beatty, former CFO and CEO Frank A. Dunn, former Controller Michael J. Gollogly and former Assistant Controller and VP of corporate reporting MaryAnne E. Pahapill have been named in a civil fraud suit brought by the SEC in the U.S. District Court for the Southern District of New York, according to a press release from the SEC.

The suit alleges the 4 Nortel (down $0.05 to $28.03, Charts) executives sought to bridge the gaps between the company’s true financial performance, its internal expectations and Wall Street’s targets between September 2000 and January 2004. Toronto-based Nortel is a telecommunications equipment manufacturer.

The complaint charges the four executives with fraud, falsifying books and records and lying to auditors. Each is also charged with aiding and abetting the company’s violation of reporting, books and records, and internal controls rules.

Dunn and Beatty are separately charged with violations of Sarbanes-Oxley officer certification provisions, the release said.

cnnMoney.com: SEC charges 4 ex-Nortel execs with fraud

Finance chiefs think that the revised SEC and PCAOB standards won’t change anything because they cancel each other out.

Mismatches between the internal-controls proposals of the Securities and Exchange Commission and the Public Company Accounting Oversight Board will keep compliance with Section 404 of the Sarbanes-Oxley Act overly burdensome and costly, CFOs think.

In letters to the SEC and the PCAOB commenting on the regulators’ proposed revisions to their guidelines, senior finance executives say that the tone and wording of the rules are too different to accomplish their main goal: to get senior top corporate management and audit firms on the same page in assessing and attesting to a company’s internal controls over financial reporting.

CFO.com: “CFOs: 404 Compliance Back at Square One”