Well, the Compliance Week 2010 conference is now done and fading into history. The event was excellent, and credit belongs to all the attendees, speakers and helpers who altogether made our 2010 conference the largest and most successful we’ve ever had. Anyone who didn’t make it to Washington this year can see what you missed on our home page, but let me also share a few wrap-up thoughts here.

Victory for non-accelerated filers? To my thinking, the most surprising news to come out of the conference happened on Tuesday morning while I was interviewing U.S. Rep. Barney Frank, chairman of the House Financial Services Committee, about what final regulatory reform legislation might come out of Congress this month. I posed a question to him about whether the bill will include a provision exempting small public companies from compliance with Section 404(b) of Sarbanes-Oxley. Right now, the House bill does include such a provision, but the Senate bill does not.

“Oh yes,” Frank said with an almost breezy understatement. “An exemption will be in the final bill.”

Um, wow. Perhaps non-accelerated filers will dodge the dreaded 404(b) compliance bullet after all. Frank admitted that he personally does not want an exemption in the bill, but he doesn’t have the votes to block it. At some point, that exemption language will still need to be inserted into the final Senate legislation, but the small business community has support from powerful senators such as John Kerry and Olympia Snowe, who serve on the Senate Small Business Committee. The political survival of the overall bill itself is now assured—I had worried about that earlier this year—so assuming the exemption language does get inserted into the bill, small filers can pop the champagne corks.

I still believe that exempting small filers from Section 404(b) is a dubious idea at best. Yes, compliance with it is a chore, but try telling that to investors at Koss Corp., a tiny company that still managed to defraud shareholders in a big way. Whether we like it or not, strong internal control over financial reporting is important for everyone.

The PCAOB time bomb. Sometime this month, the U.S. Supreme Court will rule on the question of whether the Public Company Accounting Oversight Board’s oversight structure is unconstitutional. It is entirely possible that the conservative majority on the court will side with the conservative activists who brought suit against the PCAOB, and invalidate its existence.

Nobody in Washington is talking about what to do after that.

I asked SEC Commissioner Luis Aguilar how the SEC might want to resolve the issue. He said the commissioners know the problem is out there and they have “Plans A, B and C” to respond, but declined to say what any of those plans might be. I asked Frank as well, and he essentially said his committee would work with the Senate Banking Committee to craft some legislative response, depending on exactly what the Supreme Court’s ruling says.

OK. I understand that the regulators and lawmakers who will have to clean up a damaging Supreme Court verdict must exercise some discretion in what they say before any actual ruling is made. Nevertheless, those answers are not particularly reassuring. We still have a political culture in Washington that foremost is one of paralysis, and the Supreme Court could potentially throw a huge monkey wrench into the corporate governance regime that’s been built in this country since 2002. Responses that tell Corporate America and investors alike, “Oh, we’ll cross that bridge when we come to it,” don’t pass muster. It would be nice if responsible voices in power at least floated some possible scenarios for a resolution to the PCAOB question. If nothing else, it would alleviate some of the uncertainty out there in Governance World, which has plenty enough already.

My prediction: The Supreme Court will rule the PCAOB an unconstitutional body, and ultimately the solution will be to peel away the appointed board and re-organize the rest of it as a Division of Public Accounting operating within the SEC.

The China Syndrome. Compliance officers are getting deeply spooked about doing business in China, and the many legal and security threats that come along with it. In several sessions about compliance with the Foreign Corrupt Practices Act, attendees asked regulators whether they would give extra consideration to companies doing business in risky nations like China. Answer: no.

At another session about export controls, one compliance officer from an electric utility told of how several of his company’s engineers went to China on a sales call. Their gracious hosts gave them flash drives as they were departing with some PowerPoint presentations on them… and computer viruses as well, to hack into their computers back home. This CCO is now forcing employees to use “burn phones” when visiting China and cheap, clean laptops they can leave behind—no company equipment goes into the country, and no Chinese equipment comes out of it. “I feel like I’m in an episode of ‘24’ or something,” he told me. “I mean, come on. I’m a compliance officer.”

Communication counts. We closed Compliance Week 2010 with a presentation from Second City Communications, the corporate training wing of famed comedy troupe Second City. The presentation included three improve actors trying to do sketch comedy on compliance issues (and you thought your job was hard), and in between their skits, the CEO of Second City Communications, Tom Yorton, offered his thoughts on how to communicate effectively with employees.

The word “effectively” has two shades of meaning for compliance officers. First is the practical, nuts-and-bolts chore of delivering a message to your workforce: By email, YouTube video, policy manual or Post-It note, have you stated your message to all your employees scattered around the world? That mechanical effort at communicating is important, yes, so you can demonstrate to regulators that your compliance program has done the best it can.

But as Yorton stressed, “effectively” also has a more subtle and important meaning: Do your employees understand what you’re telling them? Do they absorb that message and change their behavior somehow? Too often they don’t. Too often they merely receive the spoon-fed message you’re obligated to give them (see previous paragraph, above) without really digesting it. They pretend they care, we pretend we’ve reached them—and then sometime in the future when a compliance failure happens, we all wonder how things went wrong.

Well, it all comes down to communication that’s effective in the second sense of the word. And we cannot think about that often enough.

Every spring I write an editorial announcing the lineup of our annual Compliance Week lineup. As you might imagine, last year’s conference, in the shadow of recession and financial crisis, had a touch of gallows humor to the whole affair.

I am happy, and more than a little surprised, to report that our 2010 conference will have a much more expansive and energetic tone. In fact, this may well be our best annual conference yet—and I was there in 2007, when the economy and corporate compliance budgets were roaring along like nobody’s business. Still, to my thinking, our 2010 conference has a better agenda, covering more issues, that’s drumming up more enthusiasm and response among the compliance community. This is going to be good, folks.

Let’s start with the basics about the conference itself. As usual, it will take place at the historic Mayflower Hotel in Washington, D.C. This year we have moved it a few weeks early, to May 24-26. We’ll have several hundred corporate financial, legal, risk, audit, and compliance officers gather to debate and discuss critical compliance and risk issues, from FCPA programs and internal controls to risk management and executive pay.

Two of our keynote speakers are among the most important regulators around right now: Luis Aguilar, an outspoken reformist commissioner on the Securities and Exchange Commission; and U.S. Rep. Barney Frank, chairman of the House Financial Services Committee. Yes, some critics disagree with how Frank, Aguilar, and others in Washington are handling the financial crisis—but that’s precisely why we are putting powerful voices like theirs in front of you. They are the ones creating the environment corporate compliance officers must live in, period. Do you want to hear their logic? Do you want to challenge their logic? Our annual conference is your opportunity to do that, and to stay aware of how compliance is changing.

We also have a full complement of speakers addressing the implementation and enforcement of all the rules Washington churns out: Gary Grindler, deputy attorney general and top overseer of corporate investigations at the Justice Department; Lanny Breuer and Denis McInerney, his two top lieutenants; Shelley Parratt, deputy director of the SEC’s Corporation Finance Division, and chief expert on all things disclosure (including the new disclosures about executive pay and climate change that your company is making for the first time this spring). JetBlue’s CEO, Dave Barger, will give a joint presentation with Joel Peterson, chair of JetBlue’s audit committee, about how the airline fosters an ethical culture in today’s world.

But those are the headline speakers. The guts of the conference, as always, will be chief compliance officers talking frankly about the challenges of their jobs. We have dozens of CCOs, risk officers, and internal auditors from the country’s most prominent public companies: Walmart, American Express, TimeWarner, U.S. Steel, Tyco, Johnson & Johnson, Visa, Home Depot, and many more. They will be offering thoughts and ideas about all manner of compliance challenges and will be looking for the same from attendees. This is a peer-to-peer event, where your opinion is as important as any other.

Forking over the cash to travel to Washington and attend the Compliance Week conference is not easy in a bad economy; we know this. Hence we are striving to make this event the most relevant, informative, useful gathering of compliance and corporate governance executives in 2010. We can always deliver news and information to help you do your job, but there is no substitute for the rich experience of meeting with, talking to, and learning from your colleagues—even in an economy like this one.

So if you’re free in the last week of May, please join us. Details, the agenda, speakers, and registration information can be found at http://conference.complianceweek.com.

Well, Compliance Week seems to have touched a nerve with news of the latest speaker for our annual conference this spring: Congressman Barney Frank.

As some of you might have seen already, earlier this week we sent out a mass email announcing that Frank, chairman of the House Financial Services Committee, will be the keynote speaker at our conference (May 24-26, in Washington, D.C.). We consider this good news. Corporate compliance officers, internal auditors, financial reporting executives and boards of directors are all awaiting a tectonic overhaul of corporate governance in this country. Since Frank is, you know, the person pushing the legislation through Congress, we decided it would be useful to give Compliance Week readers a chance to hear his thoughts on the matter and ask him a few questions.

Most of you seem to understand that logic. A vocal minority, however, opened the e-floodgates and fired off the usual denunciations of Frank as a liberal windbag. One bitter gem of an example:

Barney Frank is a despicable liar who puts self-interest before the country’s best interest. He will be tossed out on his ear in November, so I personally think he is a waste of your good money—and mine. I am disappointed with your choice of keynote speaker, and I will not be attending. I’ll also have to seriously weigh my subscription options next time it rolls around.

Yikes. First off, Frank is running against token Republican opposition this year and will be re-elected. Second, the Democrats will retain control of Congress this year and Frank will continue to be chairman of the Financial Services Committee. Third, this person (the corporate controller at a nationally known retailer) should consider a few anger-management classes. Or at least try yoga.

We received several dozen more responses like that, some of them equally vitriolic and ignorant, most of them assuming that if you don’t listen to what Frank has to say, somehow what he does won’t affect you. Others said someone should grill Frank on whether he helped drive the mortgage crisis by tinkering with the Community Reinvestment Act in the 1990s … and then promptly said they personally couldn’t be bothered to do the asking. I see.

I’ve had the experience of interviewing Barney Frank several times in my career, so let me confirm: Whether you agree with his politics or not, Frank is among the most intelligent, well-versed people in Washington. More to the point, he is also among the most powerful. He is a master of the legislative minutiae that ultimately end up being what really matters when it comes time to comply with the law. So if you want to know how the United States’ new corporate governance regime came to pass (we’ll have a new one by May, remember), or why some elements of reform became law while others died, or how Congress expects you to handle this new challenge, or if you simply want to uncork your frustrations to the elected official who oversees your line of work—Frank’s speech will be the opportunity to do any of that.

My only advice is that if you do want to ask the congressman a question, for your own sake, be prepared. Frank always is, and if you don’t know what you’re talking about (like my bitter commenter above), you won’t do yourself or other attendees any favors.

You can also see all our other speakers, an agenda, and extended early-bird pricing on our Compliance Week 2010 Conference webpage.

One bit of political flotsam flushed away in last night’s blue deluge: U.S. Rep. Tom Feeney of Florida. 

Feeney, a three-term Republican from central Florida, has been an outspoken critic of Sarbanes-Oxley and specifically of applying its notorious Section 404 provisions to small companies. Well, he lost last night. Democrat Suzanne Kosmas drubbed him out of town by a 57-41 margin. 

Feeney co-sponsored legislation in 2007 to delay Section 404 for non-accelerated filers until the end of 2008. That bill went nowhere, and ultimately the SEC decided to extend the deadline—for Section 404(b), the requirement for an auditor’s attestation on internal controls—until the end of 2009 anyway. But Feeney had been a reliable voice against Section 404 for six years. Notably, he also opposed the Wall Street bailout legislation. Anyway, he’s unemployed.

On the bright side for Section 404 opponents, Scott Garrett did hold onto his House seat in northern New Jersey. He was the other co-sponsor in that Section 404 legislation, and presumably will remain on the House Financial Services Committee, where he waged his anti-SOX battles. 

One last bit of political errata this morning: One of the many rumors around Washington and here in Boston is that Sen. John Kerry might take a position in Barack Obama’s cabinet, possibly as secretary of state. Kerry is chairman of the Senate Small Business Committee and a reliable opponent of extending Section 404 to small companies—so if he leaves the Senate, someone else will need to pick up that mantle. But there’s more: When it seemed that Kerry might win the White House in 2004, Massachusetts changed its law so that a vacant Senate seat is filled by a special election within 120 days. At the time, one rumored candidate for replacement was U.S. Rep. Barney Frank, now chairman of the House Financial Services Committee. 

I don’t believe Kerry will be offered a position in the Obama Administration. And if he does receive an offer, and he accepts, I don’t believe Frank will give up what is now one of the most important committee chairmanships in Washington. But stranger things have happened.