The details of Sarbox - letters to the editor - Letter to the Editor

IN A DAY WHEN THE NEW YORK STOCK Exchange can pay its CEO $140 million and the average salary of a Fortune 500 CEO is $20 million, please do not complain about the cost of compliance with the Sarbanes-Oxley Act ("Sticker Shock," September).

How sad that the excesses of Tyco, Enron, and WorldCom require a board of directors to act independently and not be a rubber stamp for management. How sad that CFOs must comply with honesty statements, vouch for the validity of financial statements, and actually have internal-control procedures. Instead of thinking outside the box and pushing the envelope of generally accepted accounting principles, Sarbanes-Oxley is forcing executives to do the right thing. Doing the right thing has a cost. Not doing the right thing costs the shareholders.

The benefits that management cannot see aid the shareholders of the company. Let's not delude ourselves into believing that what happened at Enron, Tyco, and WorldCom were isolated incidents. Corporate executives should be looking over their shoulders. In the end, don't blame Congress: look in the mirror.

Joseph M. Galante

Accounting

Program Manager

King's College

Charlotte,

North Carolina

AFTER READING YOUR ARTICLE ON THE cost of complying with Sarbanes-Oxley, I offer one piece of advice for your readers: take a walk down the hall and have a frank discussion with your CIO. Based on our experience, and from what we've heard from technology analysts and CIOs around the country, the information-technology costs to be incurred because of Sarbanes-Oxley compliance efforts are anything but minimal.

Sarbanes-Oxley requires that companies create systems not only to track information relevant to a company's financial results but also to precisely document hundreds of processes regarding the collection of any and all data that feeds into the financial-reporting process, and to store what will amount to thousands of records in a "content repository."

We've already had many inquiries from SEC-registered companies, as well as one Big Four accounting firm and several software developers seeking a technology partner that can provide a fully managed hosted platform to run compliance-software applications. Whether CFOs realize it or not, managing this volume of information--and ensuring that the applications allow for the access and analysis of it by auditors and financial executives--is a sizable task.

H. Jameson Holcombe

Chief Technology Officer

Globix Corp.

Via E-mail

BELIEVE THAT ONE OF THE MOST SIGnificant benefits of Sarbox is the increased trust in the markets from the investor's perspective. Without a rapid response from Congress, I would argue that the depth of the market decline would have been deeper and the duration longer, and that the current market revival would be less pronounced. If I'm right, how can one say that Sarbox does not add value? I was quite amazed at what seemed to be a lot of whining by finance chiefs over spending relatively modest amounts of money to implement Sarbox, yet I have never heard any of them complaining about the large amounts spent by their companies on executive compensation, with which Sarbox implementation pales by comparison. It's as though they want us to trust them to do what's right, without regulatory oversight. We tried that, and got burned severely. Unfortunately, as a result of Enron, Tyco, WorldCom, HealthSouth, et al., the regulators have been forced to adopt the philosophy of "trust, but verify" As an investor, I sleep better at night.

Al Hartgraves

Professor of Accounting

Goizueta Business School

Emory University

Atlanta

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