Thursday, March 10, 2005

The Sarbanes-Oxley tax

Alan Reynolds - Townhall.com

For those of you who aren't in Accounting or Finance this is probably a big huge yawn. BUT - this costs all of us money. For all Public corporations the cost of this stupid attempt by Congress to legislate criminal behavior has increased business costs for audits by at least a third if not double. I've been told by many in my field no matter what to stay away from public businesses today for financial/accounting work. For myself I'm done working 80 hour work weeks for a corporation so that's a no brainer. I knew when I heard Barbara Boxer playing inquisitor to one of the CFO's during the committee hearing that business was going to be hurting. She asked this fellow in a very indignant tone: " just why aren't the numbers the same between your financial report and the tax returns. I find this highly disturbing. (not an exact quote). "

So, Barbara dumb as a box of rocks Boxer (as Hugh Hewitt calls her) doesn't know the freakin' difference between book financials and tax financials. Just 'ffing great! She's going to be advocating for laws on corporate financial accountability and she's an idiot.

Well, that's Sarbanes-Oxley - a monster.

Nearly half the pages of Sarbanes-Oxley were devoted to creating a new Public Company Accounting Oversight Board to do what the SEC already had the authority and responsibility to do. The novelty is that, unlike the SEC, this uniquely well-paid board must be dominated by people with no expertise in accounting. The only clear result, documented by The Washington Post in August 2003, has been that many overburdened mid-sized accounting firms simply stopped auditing public companies.

and
Section 440 greatly increased reporting requirements for publicly traded firms, at a cost estimated at roughly $2 million dollars on average, and more for larger firms ($30 million at G.E.). When added to the increased expense of insuring officers and directors, the accounting cost of complying with Sarbanes-Oxley has made it far more attractive to be a privately held company, rather than a company listed on any U.S. stock exchange.


and
Sarbanes-Oxley has proven harmful to the U.S. economy, and to the value of stocks still listed on U.S. exchanges, because it greatly increases the costs and risks of doing business as a publicly traded U.S. corporation and it increases the risks of serving as a director or officer. Sarbanes-Oxley has essentially the same effect as a large but unpredictable increase in corporate taxes. Congress must at least lighten the heavy load of this ill-considered regulatory tax, assuming insufficient humility and courage to repeal it. Even in politics it is generally wiser to admit mistakes and fix them than to fall into the familiar bad habit of assuming that good intentions excuse bad results.

Awwww. Now I feel better. Got that growing anger off the list!


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