Posted by: Jack Santos
Today’s WSJ had an interesting editorial commentary on SOX: James Freeman’s “The Supreme Case Against Sarbanes-Oxley”– about a supreme court case on the now infamous Sarbanes-Oxley regulations passed earlier this decade.
I don’t often agree with Rupert's henchmen (and women) at the journal, but on this issue I have to give them credit. Sarbanes-Oxley was 
ostensibly passed to shore up financial reporting and controls after the Enron and WorldCom era – the dot com bubble. Unfortunately even larger frauds (and bubbles) have occurred since then (Madoff, for one)…so the effectiveness of SOX has to be called into question.
Don’t get me wrong – SOX has been a boon for IT 
employment. Business process management, system changes, new analysts, have all been a growth employment area in part due to SOX. As a consumer, I feel that some of the SOX inspired checks and balances are good– greed needs to be monitored and regulated.
But I also believe that you can’t solve the issue of ineffective monitoring and regulation but just adding on more rules – one has to ask whether the monitoring and regulation of the existing rules is being done – and done well.
Sure – not all of SOX was bad; rules that auditors should not be consultants, that the audit and compensation committee have at least one person with a financial background on it…that is all good. But there is a lot in SOX details that is overkill.
And here we are again, another bubble, another set of financial irregularities, another failure in financial monitoring and regulation….and a democratic congress that may be hell bent on expanding the rules. How about enforcing what we have? and maybe even rollback what doesn’t work?
Sure – this won’t help IT employment, and may in fact kick a dog while it’s down (IT employment, like the rest of the economy, has not been great). But a recent call with a client put it in perspective for me. This particular client asked how he can justify the number of staff he had on hand to do a particular task. Realizing that who I had on the line was a junior manager (and that I had a teaching moment) I said “You ask how do I justify this work, these jobs, to keep folks on? Your boss is asking how can I do the job better, faster, cheaper, or add value – so that the organization, and all the jobs, can survive another day; you need to think about it in those terms to sell it to your boss”.
That little nugget is the difference between a supervisor and a manager.
And thus it is with SOX regulations….the wisdom to know what you can change, accept what you can’t, and get rid of what doesn’t work.
The end of SOX is near, we hope…but long live real regulation.
Comments