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Sarbanes-Oxley: Oxley admits problems with legislation
Michael Oxley, famous as co-author of the Sarbanes-Oxley bill and now a former Republican congressman from Ohio, was in Paris recently for a dinner attended by accountants. Oxley was asked if he had a chance to do it all over again whether a from-scratch Sarbanes-Oxley bill would look different from the one he helped create in 2005. “Absolutely”, said Oxley. After five years of retrospection, there is no doubt that if the bill were rewritten today, it would be much different.
Sarbanes-Oxley legislation was enacted during a period of investor uncertainty. The debacle at Enron which broke in 2001 may have been overlooked if it had been an isolated event. But soon after Enron there was a string of accounting scandals that included WorldCom, Adelphia, Tyco and Global Crossing. In the context of these scandals, investors questioned the oversite of US companies.
Prior to SOX, bills for strengthening corporate auditing had been considered for some time, but they went nowhere. After Enron, people’s attitudes changed dramatically. The will was suddenly there to make radical changes so something like those kind of scandals couldn’t happen again.
Bush also wanted to show that he was addressing the problem of corporate corruption. Democrats tried to implicate Bush and his former relationship to Enron’s CEO Kenneth Lay. Oxley also attributes the sacking of Arthur Anderson to Bush’s need to show the public that his administration was doing something.
After SOX was enacted companies became very conservative in their accouting and accountants were the drivers behind corporate governance. The tide is changing. Corporations are again retaking control of corporate governance.
Oxley has joined the law offices of Baker Hoestetler in Washington DC. In his new role, he’ll be helping companies create strategies for compliance.
