I was pleased to receive from a reader of the blog, Gopi Palamaner, a copy of
the Harvard
Business Review article by two Deloitte authors. The article was full
of promise given my cynicism about SOX:
"A few smart companies have stopped complaining about Sarbanes-Oxley,
the investor-protection law, and turned it to their advantage—bringing
operations under better control while driving down compliance costs."
So here I was looking for tangible savings, payback from SOX. What do I see
-- examples of improved documentation, corporate ethics training, improved
software change management, consolidation of multiple ways of processing
transactions.
All important improvements, but my reaction was:
a) for stuff being done by accountants, the benefits seemed awfully soft -
no numbers or payback cited after 4 years with thousands of companies in the sample pool
b) I would rather initiate a rigorous Six Sigma or CMM process to drive such
improvements. I want operational efficiency, not just internal controls to drive
these improvements
c) not sure I would hire a Deloitte or another accounting type firm to give me
advice on improvements in operational areas. The problem with SOX is they have
been influencing areas where they have little process expertise.
I almost gagged when they cite one benefit from a client as "“We hope
to score major points with our auditor for doing this”. If this was an Excel spreadsheet, you would get a circular logic error.
Talking about SOX, Jeff
Nolan and I have a bet on whether SOX will be amended (scaled back) this
year. Jeff will probably win on a technicality because as he says there is no
chance of that happening in an election year. But he agrees with me it needs to
be changed "While I no doubt will enjoy the bottle of wine that Vinnie
will owe me come Jan 1 2007, I would much prefer to lose this bet if it meant
we could get this bad law fixed."
Then he points to what former Fed Chairman Greenspan
has to say about SOX.
Hey, sounds like Jeff has winner's remorse - but he will likely get an unexpected benefit from SOX. Something tangible the Deloitte authors can cite!
