Has Sarbanes-Oxley been a success or failure

[tailfins]

Given the conversation about government controlling wages and CEO pay, one question that pops up is how do we know a CEO is competent and deserving of his pay. The government's answer to that question was Sarbanes-Oxley. I have seen first hand how SOX, as it's affectionately called affects companies. Because of SOX, everything must have an audit trail. It has transformed SQA for example into a archiving and documenting function instead of finding as many bugs as possible. Some companies as a result of their SOX procedures have instituted an "approved software board", apparently to audit that they don't use software that gives erroneous results. For example, there are all kinds of QA automation/performance software. There Selenium, QTP, Art of Test, Rational Tools, WATIR, Visual Studio Ultimate, various add-ons to Fiddler and the list goes on. What happens in practice? Let's say QTP is only approved by the board. The software approval board has a long queue of approvals and rejects most because of the backlog. So guess what happens if QTP can't see certain objects in the application? "It looks like we will just have to keep manual testing". Or if it's another business function, manual processes stay in place because because of the workload the software approval board has. That particular company kept pace by increasing its manual test team to more than 50 people. Could someone explain to me how we can have an innovative and healthy economy with this in place?

For example, I guess we could achieve employment expansion in the lawn care industry and save the environment by outlawing lawn mowers and other mechanical lawn equipment, a green jobs program as it were.

[fj1200]

Given the conversation about government controlling wages and CEO pay, one question that pops up is how do we know a CEO is competent and deserving of his pay. The government's answer to that question was Sarbanes-Oxley.

That wasn't the question, the question was eliminating fraud and having exec.s attest to the veracity of the financials. The responsibility just gets pushed down the ladder though given the levels of audit control as you say. But I'm not even sure why you ask the question; SOX has been an utter failure for correcting a problem that wasn't even really there and did nothing to stop future meltdowns (2008). We now just have heaped more costs on public companies which keeps many companies from going public and many more companies going private just to avoid the SOX, and other, costs of doing business. I read a story a week or two ago about the massive regulatory costs keeping companies from going public (5mm per year just for the privilege) not to mention the shareholder litigation that they get hit with for any perceived misstep (Groupon was the example company).



Sarbanes-Oxley turns 5 amid mixed results
...
Yet despite these recent reforms, Sarbanes-Oxley's true impact on the capital markets - whether it made them better or worse - still remains unclear a half a decade later. What is apparent is that there is a large contingent of stakeholders who believe the costs thus far have outweighed the benefits.
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Crippling costs
Scandals persist
Improving quality


For its part, the SEC, despite calls for reform, remains vigilant about corporate wrongdoing but still wants to eliminate what Chairman Christopher Cox called "unproductive make-work procedures that waste investors' money."
SEC Spokesman John Nester said, "We improved audit quality but at a far higher cost than anyone anticipated."

...
http://articles.marketwatch.com/2007-11-09/news/30688847_1_sarbanes-oxley-sarbanes-oxley-act-accounting-industry