Wednesday, November 18, 2009
NYT-Big Business Shill
"The fight is over whether the bill should be amended to block the imposition of a post-Enron auditing requirement on small publicly traded companies--defined as those with a market capitalization of less than $75 million. Incredibly, nearly eight years after Enron imploded and more than a year after the failures of deregulation nearly brought the entire financial system down, some members are still insisting that the audit requirement will impose undue burdens on small businesses. Under the post-Enron law, all public companies must have procedures in place to prevent errors and fraud in the company's financial statements and have outside auditors assess the effectiveness of those internal controls. ...Watching this fight play out, we despair whether corporate America or Congress have learned anything over the last year. We are even more disturbed by reports that the Obama administration is supporting the Garrett-Adler amendment. If Congress and the White House won't get tough on accounting fraud at small public companies, how likely are they to take on tougher issues and mere powerful constituencies--when it comes to controlling the multitrillion-dollar derivatives market or downsizing too-big-to-fail firms?", Editorial at the NYT, 4 November 2009, link: http://www.nytimes.com/2009/11/04/opinion/04wed2.html.
What idiocy. Congress passed the Foreign Corrupt Practices Act in 1977. So? Citigroup, AIG, Vampire Squid, Freddie, Fannie, and the rest of my "rogues gallery" (RG) each had multibillion market caps and "internal controls". So? Congress never understood SOX did nothing to prevent fraud, only enriching the Big 87654. The SEC wastes an inordinate amount of time on small SEC registrants. Why? Because it's afraid of the politically well-connected. The SEC does no cost-benefit analysis. It should largely ignore the 6,000 companies in question and focus on my RG. But the RG companies are "audited" by the Big 87654 and represented by BigLaw firms. Precisely. The audit requirement has nothing to do with accounting fraud at smaller SEC registrants. It's just more form-filling. Read Tom Selling's comments at my 30 October 2009 post: http://skepticaltexascpa.blogspot.com/2009/10/sox-404b-stinking-onion.html.