Boards of directors as well as shareholders should approve all profit-sharing plans. The board of directors should approve options to purchase stock. Corporations should not make loans to officers, directors and stockholders unless approved by the Board. Sounds like some of the new rules that have recently been instituted under Sarbanes-Oxley or the various stock […]
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Posted inFrom the Archive
Talking Compliance, Ethics With Sun’s Chief Compliance Officer
Sun Microsystems has made news for holding a Fiduciary Boot Camp to train executives and managers on new fraud and accounting practices. This week, we talk to the company’s Chief Compliance Officer, David Farrell, about his business conduct training regimen, his group’s reporting structure, the process Sun initiates to conduct investigations, and more. Let’s talk […]
Posted inFrom the Archive
British Propose Their Own Version Of Sarbanes-Oxley
Last week, the British House of Lords introduced its own version of Sarbanes-Oxley in an effort, according to MP Jacqui Smith, to “raise corporate performance across the board and beyond.” Smith The bill, known as “The Companies (Audit, Investigations and Community Enterprise) Bill,” would force companies to publish non-audit services provided by their auditors, impose […]
Posted inInternal Controls
Firms Detecting Fraud Through Internal Controls, Audits
Instances of fraud have risen 13 percent since 1998, but companies are taking more proactive measures to counter fraud than ever before. According to KPMG’s Fraud Survey 2003, company management is taking a more active approach in detecting fraud through internal controls and internal audits (see chart). In fact, over 75 percent of the organizations […]
Posted inEthics & Culture
Market Reactions May Show Governance Changes May Be Working
Are investors regaining their trust in Corporate America roughly two years after Enron Corp.’s bankruptcy touched off a wave of corporate scandals? The Bounce-Back One case involved Per-Se Technologies, the provider of outsourcing services we told you about two weeks ago when it announced that an anonymous whistleblower sent a letter to several financial research […]
Posted inRegulatory Enforcement
Chance Of Lawsuit Increases; Rate Of Dismissals Slows
LITIGATION The annual probability of facing a securities class action lawsuit has increased 40 percent since 1995. That’s according to Dr. Vinita Juneja, a SVP at NERA Economic Consulting, who recently completed a quantitative analysis of SOX’s impact on the volume and nature of class action litigation. According to Juneja, dismissals have also slowed since […]
Posted inAccounting & Auditing
GAO: Mandatory Auditor Rotation May Not Be Best Idea
A new GAO study states that mandatory audit firm rotation “may not be the most efficient way to strengthen auditor independence and improve audit quality.” The study, which was nearly four months late (it was mandated by SOX and was due back on July 30th), also stated that mandatory auditor rotation may cause a “loss […]
Posted inAccounting & Auditing
If You Owe PCAOB Fees, Auditor Can’t Provide Opinion
If your company hasn’t paid its “accounting support fee” to the new accounting oversight board, you may want to talk to the accounts payable department. According to PCAOB rules, a public accounting firm cannot sign an unqualified audit opinion with respect to an issuer’s financial statements if the issuer has “an outstanding past-due share of […]
Posted inBoards & Shareholders
SEC Adopts Disclosure Requirements Related to Director Nominations and Shareholder Communications
At an Open Meeting on Nov. 19, the SEC adopted new rules to strengthen disclosure requirements relating to nomination of directors and shareholder communications with directors. The rules follow the recommendations made by the Division of Corporation Finance to the Commission in its July 15 “Staff Report: Review of the Proxy Process Regarding the Nomination […]
Posted inAccounting & Auditing
Proposal Would Allow Auditors to Evaluate Those Who Hire Them
In order to enhance the quality of reporting and increase investor confidence, Section 404 of the Sarbanes-Oxley Act requires that annual reports filed with the SEC must be accompanied by a statement by company management that management is responsible for creating and maintaining adequate internal controls. Management must also present its assessment of the effectiveness […]