Newsroom
A confidence-builder
(Letter to the Editor - Crain's Business Detroit - August 19, 2007)
http://www.crainsdetroit.com/apps/pbcs.dll/article?AID=/20070910/SUB/709100323
Editor:
Tom Henderson's report on Sarbanes-Oxley Act compliance (“Study: Sarbanes-Oxley compliance cost grew in '06,” Aug. 13) focused on costs to the neglect of the law's primary benefit: investor confidence.
In 2002, with the loss of $7 trillion in capital after a wave of corporate scandals, and investor confidence at rock-bottom, U.S. financial markets were in dire straits. Along came a sound, and much-needed, public policy response in the form of Sarbanes-Oxley. Five years later, 84 percent of investors have confidence in our markets, according to a survey by the Center for Audit Quality. Further, a majority of those investors believe the passage of Sarbanes-Oxley was a good idea.
As with any legislation, adjustments and fine-tuning are inevitable. Auditing standards have evolved over time, based on the experiences and observations of issuers and auditors. These changes seek to make the implementation more efficient, without reducing its effectiveness. Rightly, the Securities and Exchange Commission and Public Company Accounting Oversight Board recognize that revisions must be made with investor interest and market stability top of mind.
Audit costs aside — and it's important to note that the Foley & Lardner study concluded that they have plateaued — let's not undervalue the rebound in investor confidence.
Cindy Fornelli
Executive director
The Center for Audit Quality
Washington, D.C.
