SOX Center

Phoenix, a new computer system, should simplify tracking, collecting, and distributing billions of dollars of penalties, says Chairman Cox in his budget statement.

The Securities and Exchange Commission is creating a new office dedicated to disbursing money to investors harmed in securities-fraud cases.

Under the Sarbanes-Oxley Act of 2002, the SEC became the fund holder for the disgorgement and fines it collects in such cases. While the regulator has done a good job of collecting and putting aside the cash, it has fallen behind with getting the money back to harmed investors, according to SEC chairman Christopher Cox. On Tuesday, Cox acknowledged that “too much money is still undisbursed.”

The commission has struggled in identifying claimants and keeping track of the funds, according to Cox. As a result, the SEC is creating the new office and a new computer system, he said during a Congressional appropriations meeting where he discussed President Bush’s proposed $905 million allotment for the SEC’s 2008 budget.

CFO.com: SEC Unit Eyes Swifter Fraud Payouts

The move to principles-based accounting raises concerns; paid sick time may become mandatory; the DoJ looks at private-equity ‘’clubs'’; Six Sigma gets bad press; a medical-records database alarms privacy experts; and more.

Even before President Bush told an enthusiastic Wall Street audience in January that “we don’t need to change the [Sarbanes-Oxley] law, we need to change the way the law is implemented,” the Public Company Accounting Oversight Board (PCAOB) was taking steps to do precisely that. But as it advances an openly “principles-based” approach in replacing Auditing Standard No. 2 with Auditing Standard No. 5, some question whether the new standard is doomed to fail unless associated laws and practices also change.

In an effort to make the auditing of internal controls more efficient, the new AS #5 would no longer require auditors to offer an opinion on management’s evaluation of internal controls. It would instruct auditors to cover the areas of greatest risk, rather than obliging them to visit the majority of operations, and also permit them to rely on previous audits rather than start from scratch each year.

cfo.com: Standard vs. Practices

Despite professions of independence, the Committee on Capital Markets Regulation has been accused of being sympathetic to the Bush Administration.

To anyone who has ever grumbled about shareholder lawsuits or Sarbanes-Oxley, last fall’s debut of the Committee on Capital Markets Regulation should have been welcome. Comprising 22 members from the worlds of business, law, and academia, the CCMR announced that it would examine the effects of regulations on the competitiveness of U.S. capital markets. But both the committee and its first report, released in November, have come in for criticism.

For one, the committee has been accused of being sympathetic to the Bush Administration, despite professions of independence. Critics note that Treasury secretary Henry Paulson publicly praised the committee’s efforts, and that one of its co-chairs, John L. Thornton, was a top executive at Goldman Sachs during Paulson’s tenure there. Meanwhile, the other co-chair, Columbia Business School dean R. Glenn Hubbard, was formerly chairman of President Bush’s Council of Economic Advisers.

CFO.com: Reform Effort Rebuked

On the heels of stronger-than-expected economic growth numbers and ahead of the Federal Reserve announcement on interest rates, President Bush on Wednesday told a Wall Street audience that a strong economy worthy of investors’ confidence requires free trade, business regulation that’s fair but not oppressive, and better transparency in terms of executive pay.

The president also commended the creation of Sarbanes-Oxley - a law passed in the wake of the Enron scandal to create more transparency in corporate accounting. But, he said, compliance with the law has proven very costly for companies and may discourage some from listing on stock exchanges.

“A strong economy rests on strong and flexible capital markets. … Excess litigation and over-regulation threaten to make our markets less attractive to investors. …. We need to change the way the law is implemented,” Bush said.

cnnMoney: Bush: Mind CEO pay, change how Sarbanes-Oxley works