SOX Center

Critics of the 2002 Sarbanes-Oxley act say the bill’s post-Enron/WorldCom accounting reforms have made U.S. capital markets less competitive with those overseas. It’s no surprise that one of its authors, former U.S. Rep. Michael Oxley, says that’s hardly the case. Oxley says recent refinements to the section of the act requiring companies to monitor internal financial controls and accounting are improvements, but he doesn’t believe SOX, as it’s commonly known, was crippling U.S. businesses.

Oxley was in Houston recently to talk to clients of law firm Baker Hostetler, where he now works in an Of Counsel role.

He talked to the Chronicle’s Tom Fowler about SOX’s legacy, the collapse of Arthur Andersen and why bankers may be more to blame for the high cost of going public.

chron.com: Oxley says reforms’ effects overblown

U.S. accounting overseers voted Thursday to streamline rules for auditors’ assessments of corporate financial statements, in a move that supporters say will save time and simplify burdens imposed by the 2002 Sarbanes-Oxley Act.

By unanimous vote, the five members of the Public Company Accounting Oversight Board approved a new standard directing accounting companies to focus their audits of internal financial controls on the most important risks.

Under Section 404 of the Sarbanes-Oxley Act, public companies are required to test and report their procedures for catching financial misstatements and fraud. The law was approved in the wake of accounting scandals that brought down companies like Enron and WorldCom.

But Section 404 of the act came in for heavy criticism from companies who said it cost large amounts of time and money by requiring extensive and sometimes unnecessary checks on financial reporting. It’s also been the cause of hang- wringing among some lawmakers and experts who claim it’s partly responsible for making U.S. capital markets less attractive to foreign companies, who fear the heavy compliance burden of the law.

Nasdaq: UPDATE: Accounting Board Streamlines Sarbanes-Oxley Rules

Comments about proposed changes to the controversial Sarbanes-Oxley law rolled in for a final day Monday, as debate about how best to implement it continued.

Monday marked the closing of the comment period for rules proposed in December by the Securities and Exchange Commission and the Public Company Accounting Oversight Board that aim to streamline Section 404 of the 2002 corporate-governance law. The section requires both management and outside auditors to sign off on a company’s internal financial controls.

But some commentators said the auditing provision could be tweaked even further.

“The rules and standards related to the implementation of Section 404 of the act still require significant attention,” said Grace Hinchman, senior vice president of government affairs for Financial Executives International, in a statement. The group is suggesting changes including allowing for “rotational” testing of controls that have operated effectively in the past.

MarketWatch: Further tweaks urged for Sarbanes-Oxley