Sarbanes-oxley
Wednesday, July 31, 2002
H.R.3763 – The Sarbanes-Oxley Act of 2002
A lot has been made, perhaps without justification, of the July 30, 2002 passage of H.R. 3763, The Sarbanes-Oxley Act of 2002 (“Sarbanes-Oxley” or The Act). Having read the Act, I suspect that the great praise is unfounded. I intend to address three issues presented within the act. First, I will address stock options as considered (or neglected, as the case may be) by Sarbanes-Oxley. Second, I will address the creation of a Commission designed to oversee audits and corporate accounting practices, and the potential efficacy of this Commission. Finally, I will address the modifications to the Federal Sentencing Guidelines as it relates to corporate fraud.
The failure to directly address accounting practices as they relate to stock options and other corporate incentives in Sarbanes-Oxley indicates the flaw in Federal regulation of corporate practices.
Sarbanes-Oxley was designed to address the fraudulent accounting practices undertaken by the accountants for Enron and WorldCom. One of the biggest problems with regard to the accounting used in preparation of financial statements by corporations has been the issue of non-salary executive compensation. Corporations, as part of a combined incentive and retention program, often offer
sarbanes-oxley, act, accounting, corporate, board, options, been, should, million, compensation, practices, new, corporations, address, stock, fraud, financial, accountants, punish, problem, model, creation, audits, after, 2002, thus, statements, set, sec, public, fines, executive, committee, black-scholes, accurate
