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This site recently jeered and sneered at the endorsement of Sarbanes-Oxley by the CEO of a major accounting firm that appeared in the WSJ.
Today's WSJ has a series of letters to the editor which easily outdo our meager efforts at vituperation, including:
The center of the global capital markets is slowly moving its focus from New York City across the Atlantic. . . . Mr. Quigley's earnest arguments should be met with a dose of skepticism. His firm is dependent on the Section 404 process being as complicated as possible, with the lowest possible standard of materiality, and with little regard for the fact that his very expensive bills are utlimately borne by the shareholders . . . .
-- Todd Malan (CEO, Organization for International Investment)
If Mr. Quigley could see beyond the droves of new clients . . . he would notice . . . a reduction in the number of firms opting to go public, a decrease in the quality of audits (who has the nerve to fire a bad auditor/), management distracted . . ., vast sums wasted on insignificant problems and close-mouthed executives. -- John Foster, LA
Mr. Quigley says accounting costs "have steadily declined . . . . Banks disagree. . . . [O]ur members have experienced little or no decline in external audit fees this year. -- Edward Yingling (CEO, American Bankers Association)
The major problem with SOX is not that mistakes were made -- mistakes are part of life -- but that, as usual with government programs, mistakes never get corrected. Thus one gets an increasingly baroque structure of mistake piled on inanity piled on irrelevance.
In an era of globalization, this matters. As Todd Malan's letter noted, 24 of 25 recent large IPOs took place outside the US. And once superior capacity to handle capital (and protect investors in rational way) is built off-shore, it will be hard to lure that business back.
Congessional/Executive narcissistic stubbornness is becoming an unaffordable luxury.
posted by James DeLong @ 11:22 AM | Accounting
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