Thursday, November 03, 2005

The Impact of Sarbanes Oxley

The Sarbanes-Oxley Act came into play in the wake of a series of scandals that put a few CEO's and company officers behind bars.

I've done a few posts on these fine individuals of "means" that ruined people's employment and bilked their investors of hundreds of millions, if not billions of dollars.

All Criminals are the Same

The Road to Justice is Slow for Aunt Millie

Farewell Mr. Ebbers (Former WorldCom CEO)

Today, I read an interesting press release on how effective Sarbanes Oxley has been.

"Oversight Systems Inc. today announced the findings of the "2005 Oversight Systems Report on Corporate Fraud," a survey of certified fraud examiners. The report explains that most fraud examiners view Sarbanes-Oxley (SOX) as an effective tool in fraud identification, though few think it will change the culture of business leaders."

In the press release fraud examiners were polled on recent cases on whether the defendants were guilty, or not.

"The percentage of respondents who thought the following executives are guilty of the charges against them is listed below:

John Rigas, Adelphia Communications - 95 percent, Jeffrey K. Skilling, Enron - 95 percent, Kenneth L. Lay, Enron - 96 percent, Richard Scrushy, HealthSouth - 93 percent, Martha Stewart Living Omnimedia - 72 percent, L. Dennis Kozlowski, Tyco International - 96 percent and Bernard J. Ebbers, WorldCom - 97 percent."

They also present some interesting statistics on identity theft.

"Identity theft is one of the more prevalent forms of fraud known by the average American. A February 2005 Federal Trade Commission report stated that for the year 2004, the commission received more than 635,000 reports of consumer fraud and identity theft, with identity theft accounting for 246,570 of the complaints (39 percent).

The "2005 Oversight Systems Report on Corporate Fraud" revealed that 22 percent of respondents think the justice system must get tougher on the identification and prosecution of identity thieves. Additionally, 19 percent believe that the federal government needs to pass national identity-theft-protection legislation, and another 19 percent feel regulators and consumers must work together to manage consumer information.

Some respondents believe that individuals are the first and most important line of defense. Taking ownership of one's own personal information was identified by 16 percent of respondents as the best way to reduce identity theft."

The survey was done by 208 certified fraud examiners at a conference for the Association of Certified Fraud Examiners. On one hand, it shows that these issues are very much in the public eye, but I find it concerning that 208 professionals are predicting that the positive changes might only be of a temporary nature.

Of course, being in the business of fraud myself, I would also say that certified fraud examiners make their living off of fraud and this very fact could sway their predictions. After all, it's how they earn a paycheck.

On the other hand, fraud has been on the rise for years and there is still a lot of work to do. Raising awareness and harnessing the collective voice of those, who have, or could be made victims is key to changing laws that will make permanent change.

The full survey can be viewed by clicking on the title of this post.

You can voice your opinion on these statistics by leaving a comment on this post.

1 comment:

Sunbelt Software Blog said...

SOX went too far. It's having a significant impact on the American public corporation.

We needed change, but the pendulum swung way to far the other way.

Alex Eckelberry